Ben Chapman: What recent discussions he has held with the First Secretary on management of the Dee Estuary.

Tony Blair: In respect of the summit, the very reason it has not taken place for a significant period of time has been problems over Zimbabwe. However, as well as extending sanctions on assets, the travel ban and so on, the most important thing is for us to make sure that other African countries, particularly in the neighbourhood of Zimbabwe, do everything they possibly can to make it clear that this is a disaster not just for the people of Zimbabwe but also for the reputation of good governance in Africa.
	The right hon. Gentleman and I met the President of Ghana last week. Ghana is a country that has got on its feet, held democratic elections and is doing extremely well, giving an example of model governance to the rest of Africa. It will be tragic for the reputation of Africa if Zimbabwe is allowed to remain in the state it is in.

Tony Blair: That is simply not correct.  [ Interruption. ] No, it is not correct. As a result— [ Interruption. ] Sorry, but as a result of the measures that we have taken, families who are on the lowest incomes do not pay tax until far higher up the income scale than they used to. If we look at how the lowest earners are treated in this country, it is infinitely better than 10 years ago. It now compares very well with other European countries. So as well as the Chancellor having delivered the highest employment rate, the lowest unemployment for 30 years, low interest rates, and the strongest economic growth, he has done a lot for income inequality too.

Tony Blair: The museums do an immense amount of good for our young people and the broader community. As a result of our introducing free museum entry for our national museums, we have had had millions more people going to museums—some of them from some of the lowest-income families. What my hon. Friend draws attention to is what the reality of Tory Government is like.

Tony Blair: We will certainly make sure that those projects are not the casualty of any problems to do with funding. As a matter of fact, we have already said that projects that have got funding agreed will continue to have that funding agreed. But in addition to that, the core funding for the arts has gone up by some 73 per cent. in real terms since we came to power. The reason why a lot of those projects are supported in the hon. and learned Gentleman's constituency and elsewhere is precisely the investment that we have made.

Gordon Banks: I wonder if the Prime Minister will take the opportunity to tell the House what plans are being discussed to cope with the possibility of tens of thousands of migrants entering England, Wales and Northern Ireland from a future independent Scotland because of a failed independent Scottish economy?

Gordon Brown: In this, my 11th Budget, my report to the country is of rising employment and rising investment, continuing low inflation, and low interest and mortgage rates. This is a Budget to expand prosperity and fairness for Britain's families, and it is built on the foundation of the longest period of economic stability and sustained economic growth in our country's history.
	I am told that in the past two centuries only one Chancellor before now has delivered 11 Budgets, and then a 12th. That was when Mr. Gladstone combined the positions of Chancellor and Prime Minister, something no one should ever contemplate doing again.
	As I report on the economy and public finances and the progress that we have made, let me thank for their hard work and, on occasion, forthright advice the civil servants—should I say the comrades?—with whom I have worked on Budgets present and past.
	This Budget will set out the long-term reforms that we must now make to meet the global challenges ahead, and to build a Britain of high aspiration and high achievement for the years to come. I can report that the British economy is today growing faster than all the other G7 economies. Growth is stronger this year than in the euro area, stronger than in Japan, and stronger even than in America. After 10 years of sustained growth, Britain's growth will continue into its 59th quarter—the forecast end of the cycle—and then into its 60th, 61st and 62nd quarter and beyond. Before 1997 we were bottom in the G7 for national income per head. We were seventh out of seven, behind Germany, Italy, France, Canada and Japan. Now we are second only to America and ahead of all those other countries.
	Every country has faced a trebling of oil and commodity prices, but while inflation peaked at 4.7 per cent. in America and went as high as 3.3 per cent. in the G7, here in Britain, inflation has never gone beyond— [Interruption.] Here in Britain, inflation on the same index has never gone beyond 3 per cent. While on that index it was 4.7 per cent. in the United States, it has fallen from 3 to 2.8 per cent. in Britain, and will fall further this year to 2 per cent.
	Our forecast, which is also the consensus of independent forecasters, agrees that looking ahead to 2008 and 2009 inflation will also be on target. Since 1997, inflation has averaged 1.5 per cent.; it is half that of the previous decade. After examining the historical records, it is Britain's best inflation performance for a century. And by holding firm to our commitment to maintain discipline in public sector pay, we will not only secure our 2 per cent. inflation target but create the conditions for maintaining the low interest and mortgage rates that since 1997 have been half the 11 per cent. average of the previous 20 years. We will not return to the old boom and bust.
	In the last year, investment has grown by 6 per cent., and business investment by 7 per cent., with inward investment up 10 per cent. Ten years ago and for decades before, Britain's economy was held back by chronic underinvestment; we had the lowest investment of the G7 countries. Now, alongside North America, Britain has the G7's fastest growing business investment—it has risen in real terms by 48 per cent. since 1997—and overall investment is now 17&frac12; per cent. of our national income. This year, business investment is forecast to rise again by more than 7 per cent., and the figures that we are publishing today show that as a result of that sustained growth and investment we have closed the productivity gap with Japan and Germany, have narrowed it with America, and have halved it with France. And so from a platform of high investment, we can now equip ourselves as country for the next challenge of the global economy: to raise the quantity and quality of investment in physical capital but also in human, scientific and intellectual capital.
	I can also report that in the last year employment has risen, with 220,000 more men and women in work. It is now almost forgotten that in past decades Britain suffered higher unemployment not only than America and Japan but than France, Germany and the rest of Europe. But today, with unemployment falling and with 2.6 million more people in work, Britain has a higher proportion of men and women in employment than America, Japan and all our major European neighbours. The next stage in this Budget is to do more to equip British people with the new skills for the new jobs in the decade ahead.
	With consumption forecast to rise in each of the next two years by 2&frac14; to 2&frac34; per cent., and investment and exports by more than 3 per cent., we expect that next year also, in 2008, alongside North America, our growth will again be the highest in the G7—between 2&frac12; and 3 per cent., with the same rate of growth also in 2009. Under this Government, with stability in this as in every Budget the foundation of all we do, we have sustained growth year on year.
	Just as our monetary discipline is the foundation for economic strength, fiscal discipline is the foundation of the strength of Britain's finances. Our first fiscal rule is that over the economic cycle Government current expenditures are paid by tax revenues. In this economic cycle, not only have we balanced current spending and revenues but I am able to report a surplus of £11 billion, demonstrating that for the first time in four decades Britain has met the golden rule. This contrasts with the economic cycle from 1977 to 1986, when the first fiscal rule, under the previous Government, was not met with a surplus of £11 billion but missed with a deficit of £140 billion; and in the previous cycle, from 1986 to 1997, the golden rule was missed by the previous Government with a deficit of £240 billion.
	Our forecasts of the current balance from 2007-08 to 2011-12 are affected by one major change in the last year—the sharply lower levels of production and yet higher costs in the North sea, which have this year reduced tax revenues from £13 billion to £8 billion and for each year into the future cut them by an average of £4 billion a year. Even with this reduced revenue, we are on track in the new cycle to meeting the golden rule, with figures from 2007-08 of minus £4 billion, plus £3 billion, plus £6 billion, plus £9 billion and plus £13 billion surpluses for the years to come. And we have also met our second fiscal rule—that debt should be at a sustainable level—enabling us over the cycle to borrow to meet the country's investment priorities.
	Debt is actually 44 per cent. of national income in America, 50 per cent. in the euro area and 92 per cent. in Japan, but in Britain, we expect debt from 2007-08 to 2012 to be 38 per cent., 38.5 per cent., 38.8 per cent., 38.8 per cent. and 38.6 per cent. in successive years—at all times meeting our second fiscal rule. That contrasts with a debt level of 44 per cent. that we inherited when we came to power, but we have both kept debt low and at the same time more than doubled capital investment in schools, hospitals and infrastructure from just £18 billion a year in 1997 to £43 billion of investment a year today.
	Britain's net borrowing, which in the early 1990s went as high as 8 per cent. of our national income is this year just 2.7 per cent. In future years, it will be 2.4 per cent., falling to 2 per cent. and then falling to 1.8 per cent., 1.6 per cent. and just 1.4 per cent. Compared to a deficit equivalent to over £100 billion in a single year in the early 90s, the figure for this and future years will be just £35 billion—£1 billion less than forecast at the pre-Budget report—then falling to £34 billion, £30 billion, £28 billion, £26 billion and £24 billion. That means borrowing therefore over the economic cycle not for current consumption, but for essential investment in the future of our country. So having met both our fiscal rules, we can now take forward the final work for the next spending round to take us to 2011.
	With interdepartmental reviews on youth services, disabled children, mental health, employment and the future of our regions and localities all nearing completion, we will now—in advance of the final expenditure allocations, which will be published in the autumn—set in place a national, regional and local consultation to discuss and debate issues that arise from the work in the reviews under way to build a shared national consensus around future priorities for our country. But I am also able to announce now reforms that will release resources for priority services.
	In the pre-Budget report in December, I said that from now to 2011 asset sales would release £18 billion for front-line services, but because I can announce today the sale of the spectrum, a £6 billion sale of the student loan book and further financial and corporate sales at home and overseas, asset sales will rise from £18 billion to £36 billion. I have agreed with Departments savings in administrative costs worth £1 billion a year by 2011, which will also release money for front-line services. The same front-line services will benefit from below-inflation spending review settlements for the Department for Work and Pensions, Her Majesty's Revenue and Customs, the Cabinet Office, the Treasury, the Department for Constitutional Affairs and the Attorney-General's Department. That will release for front-line services £2 billion, and with efficiency savings of 3 per cent. a year, we release, in total, £26 billion a year by 2010 for front-line services.
	Just over a decade ago, when unemployment and debt were high and as much as three quarters of all new public spending went to pay for debt and social security costs, it left only one quarter of new spending for health, education, transport, defence and policing. But because of our success in cutting debt by a quarter and claimant count unemployment by a half, those front-line services will, in the coming spending round, receive not 25 per cent. of all new spending as in the past, but 75 per cent. of all new spending.
	In this new spending round, our aim has also been—in line with the Gershon report and with continuing reform—to ensure that resources for improving the front-line services, our service priorities, will continue to grow at the 4 to 4.5 per cent. yearly rate of this spending round.
	And so these four major levers of change—better use of assets, cutting administrative costs, efficiency savings, lower debt and lower unemployment—will allow me to release new money for front-line priorities, and I can now set out total expenditures for each year to 2011.
	In 1997, capital investment stood at just £18 billion. It will rise from the £43 billion of this year to £48 billion next year and then in successive years to £52 billion, £55 billion, £57 billion, and then £60 billion of capital expenditure—more than three times what it was in 1997—as we invest in our future. And consistent with the figures set out in the 2005 and 2006 Budgets and the most recent pre-Budget report, I can announce that total expenditure, which is £552 billion this year, will rise by £34 billion next year to £587 billion, and then rise in 2008 by £29 billion to £615 billion, rise in 2009 by another £29 billion to £644 billion, and then in 2010 by an additional £29 billion to £674 billion, as we continue year after year to invest in the future.
	For the year to come, I can also allocate money to security and defence. At all times, as the Prime Minister and the Home Secretary have emphasised, we will put the security of the country first. So for the coming year, intelligence and counter-terrorism will receive an additional £86 million. Our budget for security and intelligence, which was just £1 billion in 2001, will now be for 2007-08, £2&frac14; billion. We owe a huge debt of gratitude to our armed forces. To support those who serve us with courage and distinction in Afghanistan, Iraq and in other demanding international commitments, I am allocating the Secretary of State for Defence an additional £400 million for this year alone.
	For the coming year starting next month in April, I can also confirm that the money available for investment and reform in the NHS in England will be £8 billion more than this year. It is the biggest cash increase ever. It is a cash rise of 10 per cent.—7 per cent. in real terms. For the future years from 2008 to 2011, allocations will be made in the spending review later this year, but taking the whole of the United Kingdom together, I expect total additional expenditure on the NHS from April this year to be almost £10 billion above last year—also a 10 per cent. rise in national health service expenditure.
	I have examined a proposal to introduce what is called a third fiscal rule, but I can tell the House that it would require us to cut spending this year alone by £21 billion, and I have therefore rejected that rule.
	In setting the right balance between tax, spending and the stability of the economy, we will not take risks with or break from the stability essential to our long-term economic performance. Let me be absolutely clear: with the economy now growing strongly, faster than any other major economy, this is not a time for a fiscal loosening, and the changes that I make today will be broadly neutral for the public finances and overall, which is the right decision for Britain at this time in the economic cycle.
	But it is also right to proceed today with major reforms and modernisation that will prepare and equip Britain for all the long-term challenges ahead—reforms that are now possible because they build on the higher employment, investment and the greater stability of the last 10 years, and reforms that focus on the three major priorities vital to our future. The first is to promote long-term investment and environmentally sustainable growth. That is necessary now and in the future to Britain's success in the global economy. The second is to encourage work and to reward savings, which is vital to the week-to-week prosperity of every family in the country. The third is to support and strengthen families. That is essential to the welfare of parents and children and the stability of family life.
	Firstly, to lead in global competition—and particularly to secure our place in the high value-added, investment-driven growth sectors of the future, from modern manufacturing and the creative industries to business and financial services and the City—Britain must champion open markets, flexibility, free trade and an open and inclusive globalisation, not protectionism. And here the right policy for industry is to combine the most modern and flexible competition regime—including, as announced today, the further extension of risk-based regulation, into employment tribunals—with the most effective incentives and support for British investment and innovation.
	My view is that, in all the advanced industrial economies, public and private investment in the great new drivers of growth—innovation and education—will need to rise towards 10 per cent. of national income. As part of our plan to double investment in science, I can announce that in the next four years public investment in science will rise from £5 billion this year to £6.3 billion by 2010—a 25 per cent. cash increase in the science budget of our country.
	The Secretary of State for Trade and Industry is also announcing today a £100 million competition for Britain to lead in high-tech innovation, challenging universities and businesses to come together, from medical research to environmental transport, to convert British scientific breakthroughs into British commercial successes and jobs.
	In 1997, I cut corporation tax from 33p to 31p and then to 30p. Having continued to look carefully at the requirements for a modern corporate tax system for the global economy, I propose the following changes that reflect the increasing importance in investment decisions of research and development, skills, intellectual property and environmental innovations. I propose to modernise the system of capital allowances —many of which were first introduced for the needs of the post-war economy—by simplifying them to just two categories based on how long an asset will last. I will provide more generous relief for long-life assets, raising the relief from 6 per cent. to 10 per cent., at a cost to the Treasury of £380 million in 2009; I will phase out the relief worth £230 million originally intended for industrial buildings but now poorly targeted; and I will align allowances for plant and machinery with the economic rate of depreciation at 20 per cent.
	I will increase the value of the main R and D tax credit by an extra £100 million, and expand the scope for business to draw on environmental capital allowances by an extra £40 million, while leaving the overall tax rate for North sea companies unchanged. From April 2008, for all businesses, I will put in place a new annual 100 per cent. investment allowance of £50,000.
	Because our goal is and will continue to be the most competitive business tax regime of the major economies, I have decided to cut mainstream corporation tax from April 2008 from 30p down to 28p—a rate lower than America, Germany, France, Japan, and all our major competitors—making Britain's corporate tax regime the lowest of all the major economies.
	Changes that I will announce in this Budget will also improve the position of the self-employed. But I need to act to deal with individuals artificially incorporating as small companies to avoid paying their due share of tax—a practice that, if left unaddressed, would cost the rest of the tax-paying population billions of pounds. I will take action in a way that will not raise the tax burden on the self-employed and small businesses overall.
	To reduce the tax difference between self-employment and small company incorporation, I will raise the small companies rate in three stages from 20p this year to 22p. I will recycle all those revenues to legitimate small businesses investing for the future. Small firms will be able to claim the new 100 per cent. relief for new capital investment up to £50,000, a 175 per cent. tax credit for R and D, and the new tax credit for environmental investment. A small company with profits of £150,000 and investing £50,000 of that will effectively pay tax of just 15 per cent. A firm investing the same from profits of £100,000 will pay tax of 11 per cent.—lower than today.
	I have one further announcement on business. When the Secretary of State for Northern Ireland and I meet all the Northern Ireland parties tomorrow morning, we will announce details of a new Northern Ireland innovation fund, a new fund for industry and jobs to be available for the restored Executive that we all want to see.
	Six months ago, when we published the Stern report, we set a framework for environmental action that combined a call to personal and social responsibility with European and international co-operation. Since then, we have secured support for a strengthened European carbon trading scheme on the road to a global scheme, and a new agreement for 2020 on cutting European emissions by at least 20 per cent. and potentially 30 per cent. I can also report that we have agreed bilateral partnerships with China on clean coal, Brazil, Mozambique and South Africa on biofuels, India on clean energy investment, Mexico on carbon markets, and Norway on carbon capture and storage. The Secretary of State for Trade and Industry is announcing today that Britain will launch a competition to go ahead with our first full-scale carbon capture and storage demonstration.
	Britain will also lead the way in helping developing countries to address climate change. I can announce financial support of £50 million for a path-breaking 10-country initiative across central Africa to prevent the destruction of the second largest rain forest in the world. Led by Nobel prize winner Wangari Maathai, it will help 50 million people in those 10 countries whose livelihoods are now under threat.
	Environmental action also requires us to co-operate internationally in new ways. To help meet our commitment to international poverty reduction through environmental protection, I will allocate to the environmental transformation fund, jointly run by the Secretaries of State for International Development and for Environment, Food and Rural Affairs, a total of £800 million for the coming spending round.
	At home and abroad, the test that we must apply is what is the most environmentally effective, economically efficient and socially equitable way of reducing emissions: first, through better information and incentives; secondly, through higher standards and investment.
	Homes account for one quarter of carbon emissions: our objective is for low-carbon homes benefiting the climate through lower emissions, and consumers through lower bills. Having already announced measures to speed up home insulation and to design out energy-wasting products, we have been consulting the banks and building societies and encouraging them to create a new market of mortgages for immediate capital investment in energy efficiency that would cut consumption and bills and, in the end, not only pay for itself but increase the sale value of the home.
	To play our part, we are offering grants of £300 to £4,000 for pensioners and others installing insulation and central heating. From next month, we will increase by 50 per cent. microgeneration grants for homes. I can confirm that until 2012 all new zero-carbon homes up to £500,000 will be exempt from stamp duty. I have asked the Office of Gas and Electricity Markets to examine how green homes can benefit more from the prices paid when they become not just sources of clean energy for themselves but sell energy back to the grid.
	I am placing in the Library of the House of Commons the representations that the Foreign Secretary, the Minister for Europe and I are making to European Ministers for a Europe-wide decision that would reduce the rate of VAT from 17.5 per cent. to 5 per cent. on energy-saving and environmentally friendly products in the home.
	Business accounts for 40 per cent. of emissions: our objective is that we have not only the most economically competitive but environmentally sustainable companies too. Since 1997, business and Government together have achieved a 25 per cent. reduction in the carbon intensity of the economy. To complement the new environmental tax credit that I have just announced, the advice, support and incentives available from Business Link and our regional development agencies to small businesses for environmental improvement, innovation and energy audits of their work will rise from £140 million this year to £240 million in the coming year.
	To encourage recycling and to reduce landfill, the landfill tax will, from April next year, rise by £8 each year to 2011. To reduce the environmental impact of quarrying, the aggregates levy, which has been frozen since its introduction, will rise in April 2008 from £1.60 to £1.95 per tonne. Those measures, our membership of the European emissions trading scheme and the inflation increase that I propose from next April in the climate change levy, will together each year contribute 16 million tonnes of carbon reductions.
	As recommended by the Barker report and today by the Lyons report, and in line with representations from the Federation of Small Businesses, commercial property lying empty should not continue to be given such generous business rate relief, particularly because that leads to higher rents in the areas with highest demand. To encourage the better use of commercial premises, I will restrict the relief available for empty industrial properties to six months, and for empty offices and retail to three months. There will be special exemptions for charities.
	Transport accounts for a quarter of emissions: our objective for Britain is the lowest carbon cars using the least polluting fuels. Average new car emissions are around 167 g of carbon dioxide. A medium-term objective is 100 g per kilometre. We want Britain to lead in developing the next generation of low and no-carbon vehicles and fuels. The Secretary of State for Transport and I have invited Sir Nicholas Stern and the vice-chancellor of Aston university, Professor King, to report to us on the energy saving potential of innovation in this area.
	Renewable transport fuel obligations mean that biofuels will, by 2010, account for 5 per cent. of all fuel in road vehicles, and by 2020 potentially 10 per cent. So I am extending to 2010 the biofuels duty differential worth 20p per litre, a fuel duty discount of 40 per cent. I am also extending to 2012 the biogas incentive, worth 40p per litre, a discount of more than 60 per cent. For this year I will maintain the differential for rebated oils. I can also announce that we will triple our funding for targeted enforcement against unfair competition from haulier companies from outside the United Kingdom.
	We inherited a one-band system of vehicle excise duty in 1997. Britain now has environmentally graduated bands. That is one reason why the proportion of least polluting cars on our roads has risen by 30 per cent., while that of the most polluting cars has fallen. So there are potential gains from enhancing the incentive. In addition to maintaining a zero rate for the lowest band, aligning petrol and diesel rates at the diesel rate and raising the rates by £5 each year for the next three years, and for band F by £10 this year, I propose an immediate 30 per cent. cut in band B from a top rate of £50 down to £35 for the most fuel-efficient cars. That will be matched by moving the top band 30 per cent. higher to £300, and then again to £400 next year. Taken together, those measures will cut vehicle emissions since 1997 by 2 million tonnes. For the coming year I will set fuel duty rises at 2p a litre, for 2008 at 2p, and for 2009 at 1.8p, but I will defer this year's annual fuel duty increase by six months to October.
	I have had representations to put VAT on airline tickets—a 17&frac12; per cent. rise in the cost of airline travel. I have investigated the detail of that proposal. It gives me no pleasure to have to tell the House that the substance of the measure has not been properly thought through. It would apply only to domestic flights, business would be able to claim back the VAT, and even by 2020 it would save just 50,000 tonnes—fewer savings in one year than achieved by the climate change levy in just one week. So I have rejected the proposal in favour of the 6 million tonnes of carbon saving achieved by the fairer and more environmentally efficient measures that I am outlining in the Budget today.
	I propose only the normal indexation of alcohol duties, with one exception. From midnight on Sunday, beer will rise by 1p a pint, cider by 1p a litre, wine by 5p a bottle and sparkling wine by 7p, but for the 10th Budget in a row I will freeze duty on spirits. While I will go ahead from 6pm tonight with the annual inflation rise on a packet of 20 cigarettes—of 11p—I want us to do more to support the health advice campaign initiated by my right hon. Friend the Secretary of State for Health, with a new incentive to encourage people wishing to give up smoking. For a year from 1 July, for nicotine replacement and other products that help smokers to quit I am cutting VAT to the lowest I can, from 17&frac12; per cent. to 5 per cent. I propose to align the bottom two rates of gaming duty at 15 per cent., and for the largest casinos to set a 50p rate.
	Our culture of volunteering and giving defines Britain as a fair and compassionate society. To help small local community organisations, my hon. Friend the Member for Doncaster, North (Edward Miliband), the Parliamentary Secretary, Cabinet Office and Minister for the third sector, is announcing for the years to 2011 a new fund for local communities worth £80 million. Hundreds of millions of pounds worth of giving is eligible for tax relief through gift aid, but is not currently claimed. My right hon. Friend the Chancellor of the Duchy of Lancaster and I will consult the charitable sector on measures that we will fund to increase take-up of gift aid, and in the run-up to the spending review my right hon. Friend the Secretary of State for Culture, Media and Sport and I will examine the help we can give the churches and heritage buildings that are at the heart of so many of our communities.
	I turn to the tax incentives with which we propose to help more people into jobs, and to make work pay. More than 1&frac12; million low-income workers in Britain receive the working tax credit, worth to them on average £48 a week. In making work pay, we ensure that people on low incomes get more benefit from the working tax credit than either the minimum wage or any other tax measure, whether it be the 10p rate or personal allowances.
	If I invested a billion pounds in helping low-income workers by raising personal allowances, they would be only 68p a week better off. If I used the same money to lower the 10p rate, they would be just 67p a week better off. But the use of the same money to extend the working tax credit means that they are £7.10 a week—£370 a year—better off. That is a clear incentive to take jobs, to gain skills, and to work your way up from a lower-paid to a better-paid job.
	This Budget will invest over £1 billion a year in raising the value of the working tax credit, so that—building on the minimum wage of £5.52 from October—for the parent in full-time work with one child it will rise to £7.70 per hour. Because of the working tax credit, that is £290 for a 35-hour week.
	Since 1997, lone-parent employment has risen from under 45 per cent. to over 56 per cent., and 300,000 more lone parents are now in work. In addition to helping them by increasing the working tax credit, I will extend the £40 a week in-work bonus paid for their first 12 months in work. In London the bonus will be extended to £60, and for up to 50,000 workless parents undertaking training we will extend access to free child care.
	With this additional support to make work pay and our new conditionality, announced by my right hon. Friend the Secretary of State for Work and Pensions a few days ago, and building on the successful employment partnerships in the new deal, we are now able to announce a partnership for jobs with our major retail companies—Tesco, Sainsbury's, Asda, B&Q and Marks and Spencer—and the British Retail Consortium: an agreement that in every part of the country, unemployed men and women who successfully pass work trials or induction courses will be considered for jobs by those leading firms. It is a new and innovative partnership that will, across the sector over the coming five years, help create 5,000 jobs in Wales and 10,000 in Scotland. In total, for Britain it will help 100,000 men and women to find employment in our country.
	Since 1997, the number of 16-to-24-year-olds in full-time education, employment or training has increased from 5.2 million to 5.8 million. For those who have fallen through the net, over the next spending period we will do more. We are setting aside new funds today, so that 50,000 out-of-work 16-to-17-year-olds who sign activity and learning agreements will now receive a training wage in return for gaining skills. For small companies that take on an employee needing to acquire the most basic skills, we will also offer £2,000 training help per employee, and in some cases £3,000 for training.
	There are 125,000 employees who, through no fault of their own, lost their work pension when their employer became insolvent,. My right hon. Friend the Secretary of State for Work and Pensions is announcing that he will extend the financial assistance scheme from its present budget of £2 billion to a total of £8 billion. Every one of those 125,000 workers will now receive help. Reporting later this year, my right hon. Friend will also investigate in full the assets within the affected schemes, and how those funds can also now help those who have lost their pensions.
	In meeting our objectives to support families and children, I have also received representations for the return of the married couples allowance, and for a transferable tax allowance between husbands and wives with children under five. On closer inspection, I have discovered that such a proposal would penalise 3 million widows and their children who would be denied the allowance, and would also penalise wives or husbands who had been left by their spouses. I have also discovered that the transferable tax allowance earmarked for families with children under five would be available to just under 1 million married couples. I can tell the House that, far from rewarding marriage, it would exclude the vast majority of the 11 million married couples in this country, and the 11 million children who would be excluded and left out of this help.
	You do not support marriage by penalising most married couples and 11 million children. It is right to recognise marriage in the tax system, but in ways that do not penalise children through the arrangements that we make for assets to be transferred free of tax between husband and wife in inheritance tax and capital gains tax. I can announce that the annual tax exemption for capital gains will rise from £8,800 to £9,200, and will be £18,400 for married couples. I can announce that the inheritance tax allowance, which is £285,000 today, will rise in each year and will in 2010 be increased to £350,000, ensuring that 94 per cent. of estates do not pay inheritance tax.
	I am also today making changes in VAT, which will especially help grandmothers and grandfathers living with their sons and daughters. I can announce that for a specified list of alterations to housing, to support the needs of older people I will again reduce the rate of VAT, from 17.5 per cent. to 5 per cent.
	For many families, especially young couples, the major concern is affordable homes. To further our ambition for this Parliament and the last one of there being 2 million new owner-occupiers, the Secretary of State for Communities and Local Government is launching the first stage of a new shared equity competition that will bring homes within the reach of first-time buyers.
	I also want to send a signal about the importance we attach to encouraging savings, so while maintaining our savings rate at 10p, I will extend for the 17 million men and women with ISAs—individual savings accounts—the amount of cash that can be saved tax-free from £3,000, raising it by 20 per cent. in April next year to £3,600.
	After independent taxation was introduced by the previous Government on income, there has been general agreement that the best way to help the income of families with children is to raise child benefits and to help all children. For the first child of all parents, child benefit was £11 a week in 1997. This year it is £17.45. I can announce today that we will raise child benefit annually for the first child in three successive stages to 2010—raising child benefit by a total of 15 per cent. to £20 for the first child. So child benefit, which was £575 a year in 1997, will by 2010 be more than £1,000. For 6 million families on both child benefit and child tax credit—that is the vast majority of families—the minimum payment, which was just £11 in 1997, will rise to £31; that is a rise from £575 a year to £1,600 a year.
	I can also do more to help those who need it most. Help for the poorest child, which in 1997 was £28 a week and is today £61, will now rise in three successive stages by more than 25 per cent. to £75 a week, almost three times the 1997 level. That measure will, with others, lift out of poverty 200,000 more children. With children's credits offsetting income tax liabilities, the effective point at which a family with two children starts paying income tax, which was £16,000 in 1997 and which is £22,500 now, will be £24,250 in April 2009—tax credits therefore effectively wiping out income tax liability until earnings of £450 a week.
	We will match financial support for children with more help for parents to do the best by their children. I have set aside today funds for expanding ChildLine, Parentline Plus and the services parents and children use and rely on. We now know the importance of early-years learning in developing the talents of children and the significance of investment early to determine the qualifications and success that they have later. So the Secretary of State for Education and Skills and I have today made available the funds for each of the years to 2010 to honour our promise that there will be six children's centres in the typical constituency, and 3,500 children's centres in total. We have also set aside funds for the years to 2010 so that we can expand the numbers of hours of free nursery education, meeting our promise to raise nursery hours for every three and four-year-old from 12&frac12; hours to 15 hours a week. Also, to encourage the community use of schools sports facilities we will remove the VAT restriction and enable academies to make their sports facilities available to their local communities.
	I am also able today to take several hundred thousand of today's pensioners out of income tax. When we came to power, elderly citizens started to pay income tax when their income exceeded £5,200. Today, no tax is paid before an income of £7,280. For those under 75, the tax-free allowance will rise in three stages from £7,280 to £8,990 to £9,500 and then to £9,770 in 2011—a tax-free allowance of almost twice as much as in 1997. For those over 75, the tax-free allowance will rise annually from £7,400 to, by 2011, £10,000. Couples under 75 will have a tax-free married allowance up to £19,540, and for a couple over 75 up to £20,000. Measures in this Budget mean that we will lift out of income tax a total of 600,000 pensioners in this country. For elderly people with either no works pension or small works pensions, I can confirm we will raise the pension credit guarantee from £114 a week this year to £119, rising to £130 in 2009-10. The pension credit will be raised by earnings as we move towards our commitment to link the state pension to earnings.
	I have focused support on families by raising child benefits and child tax credits and taken 200,000 more children out of poverty. I have done more to support pensioners by raising the level of tax-free allowances. I have improved work incentives for lower income families with children by raising the minimum income from work to make work pay—to, for many, almost £300 for a 35-hour week. My aim in all measures today is a fair system for pensioners and families with children.
	Having put in place more focused ways of incentivising work and directly supporting children and pensioners at a cost of £3 billion a year, I can now return income tax to just two rates by removing the 10p band on non-savings income. I can also announce that the point at which people start paying top rate income tax will from April 2009 not be an annual income of £38,000, but £43,000; and I will align the income tax system with the national insurance system, with its ceiling set at the same threshold of £43,000, thereby creating a tax system for income that has just two rates and two thresholds. As a result of today's measures, 58 per cent. of pensioners over 65 will not pay income tax; 6 million out of 7 million families with children are better off; and the incentive to work is increased by, for many, up to £350 a year.
	With the decisions that I have made today, I am also able to announce that we will invest more in our schools and education. Separate announcements will be made later for Scotland, Wales and Northern Ireland. Education spending in England, which was £29 billion in 1997 and is £60 billion this year, will be £64 billion next year, rise to £67 billion and then £70 billion, and then rise in 2010 to £74 billion. There will be average rises of 5 per cent. cash each year for the next three years, enabling us to provide one-to-one tuition for 600,000 children, do more to double apprenticeship numbers to 500,000, increase higher education student numbers to 1.2 million, and make every school an extended community school. Also, cash-spending per pupil, which was £2,500 in 1997, will from now to 2010 rise by a further 20 per cent.—10 per cent. in real terms—to £6,600 per pupil, thereby continuing to narrow the gap in investment per pupil between state and private schools. Education spending will rise as a share of national income from the 4.5 per cent. that we inherited in 1997 to 5.6 per cent. in 2010. Also, as the Secretary of State for Education and Skills will set out, by changing the education leaving age we will for the first time in our country's history make education a right for every young person until the age of 18.
	I have taken 600,000 pensioners out of tax, raised child benefit in three stages to £20, cut corporation tax from 30p to 28p and increased education spending to the highest level ever. This is a Budget for Britain's families; it is a Budget for fairness; it is a Budget for the future; and I have one further announcement. With the other decisions I have made today, we are able to hold to our pledge made at the election not to raise the basic rate of income tax. Indeed, to reward work, to ensure working families are better off and to make the tax system fairer, I will from next April cut the basic rate of income tax from 22p to 20p, the lowest basic rate for 75 years. I commend this Budget to the House.

David Cameron: Thank you, Mr. Deputy Speaker. It is a bit like Stalin: they are cheering him on now—he will wipe them out later.
	Let me tell you, Mr. Deputy Speaker, what the Chancellor's real problem is. It is not that he is a Stalinist who holds all his colleagues in contempt, although that probably does not help; it is that he has wasted money on an industrial scale. That is the truth. His great experiment in tax and spending has failed. He is an out-of-date politician wedded to state control, and the question that everybody is asking is: where has the money gone? This is the "Where has the money gone?" Budget. For 10 years, the Chancellor has been telling us that education is his priority—he did it again today—but 40 per cent. of primary school leavers cannot read properly. For 10 years, he has been telling us that he wants a competitive economy, but he has given us the biggest tax burden in our history. For 10 years, he has been talking about child poverty—he did it again today—but the number of people living in severe poverty is up by 400,000. UNICEF says that Britain is the worst place in the developed world to bring up children.
	For 10 years, the Chancellor has been telling us about the NHS. Today there was barely a mention. All that he has done is to reannounce this year's money, which we already knew about. He has the figures for the future. Why will he not tell us about them? Does that not tell us everything that we need to know about the crisis in the NHS? The hole in the heart of this Budget is the failure to fix the NHS.
	The NHS was not the only thing that the Chancellor hardly mentioned. Let us look at what was in the Budget that did not get a mention in the speech; that is always an important list. Soon, the Chancellor and his allies will be going round the country saying that the spin, distortions and half-truths of the Blair era are coming to an end; some of them have started already—but actually, with the Chancellor spin will get worse.
	Let us look at today's Budget. The Chancellor did not point out the savings ratio, which is hidden on page 255 of the Red Book; it has halved since he took office. Business investment as a share of gross domestic product, one of the keys to future growth, is on page 257 of the Red Book; again, it is below 10 per cent. and going backwards. What about page 260 of the Red Book, which says that
	"the overall trade deficit is up"?
	Again, there was not a mention of that from the Chancellor.
	The Chancellor talked about research and development tax credits, but he did not tell us that since they were introduced, R and D has actually fallen. He barely mentioned the Lyons report on local government. He normally trumpets these reports and tells us how proud he is, but today there was not even a mention. Make no mistake—the measures in the Lyons report will hit every family in the country. The Chancellor did not mention retail price inflation, either, which is now at 4.6 per cent.—almost double what he inherited. All those things are in the Budget; none of them were in the speech.  [Interruption.] I know that the Chancellor and the Prime Minister are having their annual conversation, but I do not know why he bothers talking to the Prime Minister; he is not "bovvered" any more.
	A fortnight ago, the Prime Minister said that the arts were a "core" part of the script. They were not even in the Chancellor's script. The Chancellor boasted about foreign direct investment, but he did not tell us that the Red Book shows that half of last year's foreign direct investment was accounted for by the restructuring of one company—Shell. That did not get a mention. In spite of all the extra taxes, let us look at the borrowing figures. The Chancellor listed them through gritted teeth. They might have been whitened, straightened and privately polished —[Interruption.] He has spent all that money on his smile, but he will not even give us one. He is not going to win over Kylie like that.
	Let me read back the five-year plan—I mean, the Budget. This year, the Chancellor will borrow £35 billion, then £34 billion, then £30 billion, then £28 billion, and then £26 billion. That is a total of £153 billion by 2011, which is £8 billion more than he told us about just three months ago. This is the Chancellor who has built up a pile of debt. Again, where has all the money gone? We have had a bonanza on spending on the NHS, but nurses are being sacked. He brags about people's long-term security, but the pension system is shot to pieces. He boasts about spending on young people, but the number not in education, employment or training is up by a third. So he has not just borrowed billions; he has wasted billions. What a wasted opportunity—billions taxed, billions borrowed, billions wasted.  [Interruption.]
	The Chancellor has run out of money, so let us look at the big tasks, the big things that he said —[Interruption.]

David Cameron: It is difficult for them, Mr. Deputy Speaker; they are just realising that their next leader has the tendencies of Stalin and the poll ratings of Michael Foot. The Labour Front Benchers are all standing in the deputy leadership contest because they know from history that that is the one way to avoid the gulag.
	Let us look at the big tasks that the Chancellor set himself 10 years ago. He said that he would make the economy more productive, make work pay and tackle inequality. He called productivity growth the
	"fundamental yardstick of economic performance".
	It has almost halved. It is now lower than in France, lower than in the United States and lower than in the G7 as a whole. As the Prime Minister's former economic adviser put it, the Chancellor is "furring up" the arteries of the economy. Apart from that of India, our tax code is now the longest and most complex in the world. The World Economic Forum says that it takes longer to start a business here in Britain than it does in Serbia. All we have had from the Chancellor is a super-sized bureaucracy.
	The Chancellor promised to make work pay. Budget after Budget, he has poured money into the tax credit system. It now costs £16 billion and employs more than 8,000 people. Last year, more than £2 billion was overpaid. Half of all the awards were wrong. The former Home Secretary said:
	"The tax credit system is a shambles—such a shambles that I've had to help...my constituents financially".
	He added that it is
	"such a total mess".
	The Chancellor did not tell us that those in work face effective marginal tax rates that would not seem out of place in Cuba. There are 160,000 people who keep only 10p out of every extra pound they earn. Last time we had a 90 per cent. marginal tax rate, at least it was the richest who paid. Now it is the poorest. It is not surprising that social mobility has gone backwards.
	Having failed on the public services, on inequality and on poverty, the Chancellor is posing as a friend of the environment. Last week he told us that he did not want green taxes. Now he is introducing them by changing vehicle excise duty. But he leaves the Treasury with carbon emissions up and green taxes as a proportion of total taxes down. I am not surprised that the Secretary of State for Environment, Food and Rural Affairs is standing by the door. He is probably off to launch his leadership campaign. If he had any courage, he would go for it.
	The Chancellor spoke a lot about education. Let me take his big pledge. He promised that spending per pupil in state schools would be made equal to spending in private schools. That was the big Budget promise last year. First it was a pledge. Then it became an aspiration. Then it became a long-term ambition dependent on growth in the economy. So what have we learned today in the Budget about this policy that is meant to be the centrepiece? He has told us that he might narrow the gap; that is absolutely nothing.
	There is no timetable for this pledge about matching state and private education. So what is the Chancellor actually telling us? Can he tell us what private school spending will be in five or 10 years time? No. Can he tell us what state school spending will be in five or 10 years time? No. So that is the great message from the Chancellor. It is his aspiration that one day a number that he does not know might be almost as big as another number he does not know, but he cannot tell us when. Labour Members can put that in their election addresses, but it will not save their seats.
	Let me tell the Chancellor what we welcome in the Budget. We welcome the capitalisation of the student loan book. We suggested that three years ago. We welcome the cut in corporation tax. We suggested that three days ago. In fact, if one looks at the whole approach of this Budget, one reaches an inescapable conclusion. Spending is going to grow —[ Interruption. ] The monkeys opposite jeer, but they do not know this.
	Spending is going to grow 2 per cent., then 2 per cent. and then 1.9 per cent. The economy is forecast to grow by 2.5 per cent. or more in each of the next three years. So the Chancellor has just announced a third fiscal rule. He is sharing the proceeds of growth. He has spent all year attacking our policy and making up ludicrous figures for cuts in public spending, but now he is introducing it. This is the "great master of strategy". He has spent months planning this Budget, with thousands of civil servants in a Treasury that costs almost twice as much as when he first walked through its doors. And the best he can do is to introduce a policy that I announced a year and a half ago. What a genius.
	When the Chancellor finally gets to No. 10 Downing street, without any sort of mandate from the British people, why not call an immediate election? Then we can introduce all our policies. That is the Chancellor's problem. He cannot be the change that we need. As the right hon. Member for Birkenhead (Mr. Field) says:
	"With such clear responsibility for what has gone on, how can he offer the country a new start?"
	The Chancellor is not the solution. He is the problem. That is the tragedy for the Chancellor. For years he wanted to be the young pretender and he has ended up as the old man in the Kremlin. The target culture is his culture. The failing schools are his failures. The pensions system is broken because he broke it. The Blair-Brown era is coming to an end. The great ship of new Labour is now a listing, leaking, rusting hulk, and it is heading for the rocks. He cannot jump ship because he has been the pilot for the last 10 years. They are going down—and he is going down with them.
	Just think what a legacy 10 years as Chancellor could have produced. We could have had a Budget about a better NHS, a competitive economy, protecting the environment or strengthening families. But for a Budget like that, we will have to wait not for a change of Chancellor, but for a change of Government.

Menzies Campbell: Once again, I am struggling to match the intellectual rigour of the previous speech. I am pleased to congratulate the Chancellor as he celebrates his 11th and, as we must assume, last Budget. He is now comfortably the longest serving post-war Chancellor, and that in itself is a remarkable feat. I congratulate him warmly. I also note with some relief his expression of suitable reverence for the record of Mr. Gladstone.
	Sadly, this Budget does not quite live up to the auspicious nature of the occasion. We have seen, over the years, the Chancellor's capacity as a conjuror to use sleight of hand to produce proposals that seem attractive on the face of it but which, examined in a little more detail, are discovered to be rather less attractive than they first appeared. We have had seven years of booming, but often wasted, public sector spending. This is the Budget of a Chancellor ready to move on—a wait-and-see Budget from a wait-for-me Prime Minister.
	The Budget has not done enough for the hard-working family that is increasingly struggling with the rising cost of living; for the young couple who have finally got on the housing ladder, but are now fearful that the next interest rise may push them off it again; or for the nurse, police officer or firefighter whose reward for service to their communities has been to see their income squeezed by a burden of taxation higher than that imposed on the richest in this country.
	The Chancellor had the opportunity today, in this final Budget, to show that he was listening to the people of Britain, but he has delivered a Budget of missed opportunities. He had the chance to build a fairer Britain, but he has ignored it. He had the chance to create a greener Britain, but he shunned it. And he had the chance to shape a prudent Britain by saving billions of pounds on Government waste, but he has avoided it. He has spurned all those opportunities.
	The Chancellor has instead concentrated, perhaps not surprisingly, on his own political succession. But I have a warning for him of a vision of the Prime Minister springing up from his political coffin, like Dracula, to confront the Chancellor. A stake through the heart may seem excessive, but he should beware. As the Americans say, "It isn't over till it's over."
	To be fair, I must add that this Budget is set against the backdrop of a reasonably strong economy. Growth remains stable and unemployment remains low. I acknowledge that Britain has a reasonably strong economy. We have supported investment in public services through an increase in taxation from the 1997 base, and we supported independence for the Bank of England. I hope that the Chancellor in turn will be generous enough to point out that those were Liberal Democrat policies, which he derided in opposition but adopted in government.
	I talked about the Chancellor's sleight of hand—and I refer the House to page 13 of the Red Book, and item 15. The Chancellor told us as he sat down, to waves of applause, that he would cut the basic rate of income tax from 22p to 20p. On the face of it, that is a Liberal Democrat proposal and a welcome one. But if one looks carefully, one sees that the revenue to justify that reduction will be obtained from the abolition of the 10p rate. To fund the reduction, income tax will be increased for many taxpayers. One could say that we will be asking the poor to subsidise the rich. That is an example of the sleight of hand that the Chancellor has demonstrated in the past.
	The sad fact is that despite a reasonably strong economy, the wealth gap between rich and poor is greater today than it was under Margaret Thatcher. By introducing loopholes in the capital gains tax regime, the Chancellor has allowed the wealthiest individuals to minimise their tax bills.
	An example of that is the Chancellor's proposals on inheritance tax. They are obviously welcome, but he did not point out that the number of estates valued at more than £2 million that pay inheritance tax has fallen by nearly 10 per cent. since 2001. That tells us that the rich find ways of avoiding paying inheritance tax, and we are entitled to look for some recognition of that by the Chancellor, and for some willingness on his part to take steps to deal with it.
	I am afraid that the Chancellor has proved to be every bit as susceptible as some of his Conservative predecessors to giving tax breaks to our richer citizens at the expense of our poorest. The lowest-earning fifth of UK households still pay a greater proportion of their income in tax than the highest earning fifth. This Budget was an opportunity to rebalance the tax system in favour of the less wealthy, but the Chancellor has refused to take it.
	With a proper, full approach to raising green taxes, the Chancellor could have helped to encourage a change in environmental behaviour. Of course his proposals on vehicle excise duty are welcome, but they fall far short of what is required. I listened to his speech with care, but I did not hear him say anything about aviation. Do the Government believe that the right hon. Gentleman's recent imposition on aviation has had a significant—or even a discernible—environmental effect? We also need to know whether the proposals apply only to new motor cars, or are retrospective.
	This should have been a tax-cutting Budget. It should have cut the tax burden on the low and middle-income families who need it most. That is what one should do with the proceeds of green taxation. That is the true moral case for tax cuts, and it is a matter of regret that the Chancellor has not chosen to act on it.
	Of course, taxes have been raised significantly since 1997. Neither I nor my party are persuaded by the case for raising them further. The Chancellor must resist the temptation to tax and spend. Indeed, he should seek to save in order to spend.
	Large sums of public money have been wasted on unnecessary and unpopular measures, but now the Government are planning to waste more. We should recall that the war in Iraq has cost more than £5 billion so far, and that is quite apart from the human cost that is emerging. We know that the President made the decisions on Iraq, while the Prime Minister made the case for the war, the Chancellor signed the cheques, and the Conservatives voted it through.
	Secondly, identity cards will cost at least £6 billion, and some estimates put the cost as high £18 billion. That money should be invested in the police and security services. Thirdly, we are already committed to spending £76 billion on the decommissioning of the existing generation of nuclear power stations. Building a new series of nuclear power stations—something to which the Government appear to be committed—will simply add to that bill. The Government should not be wasting taxpayers' money in that way.
	The announcements in the Budget were made against the background of an increasingly unbalanced economy. Britain's accumulated private household debt has now reached a total of £1.2 trillion. Any decline in the housing market would be devastating, for millions of families and for the economy as a whole. Moreover, the burden of servicing that accumulated debt is also rising. The average cost of debt repayment in relation to income is now close to the level experienced during the debt crisis under the previous Conservative Government.
	The Chancellor talks about the fiscal rules, but he should take steps to restore their credibility. He should have established an independent fiscal authority, as advocated by the Institute of Fiscal Studies. We should have an independent assessment of the economic cycle on which the Treasury bases its figures. The Chancellor simply should not be allowed to mark his own examination papers.
	Some questions arise from the Budget statement that need to be answered. The public are entitled to know the effect of the Budget on their tax bills, and on the overall state of the economy. Will the Chancellor confirm that it raises the tax burden on lower and middle-income earners? Why has he failed to combat rising levels of personal debt, or to set up an independent system of assessment for fiscal policy? And why, in his 11th and final Budget, has he not rebalanced the tax system properly, with proper tax cuts for lower and middle-income earners? Those are questions of crucial importance, and the Chancellor should answer them.

John McFall: I congratulate the Chancellor on the Budget, which will benefit families, society and business. He has taken 600,000 pensioners out of taxation and increased child benefit, and that is extremely important and welcome. However, he has also given us a Budget for business, with corporation tax being reduced to its lowest level ever, and income tax to its lowest level for 75 years.
	I want to congratulate both the Chancellor and the Prime Minister. The Select Committee on the Treasury is undertaking an inquiry into the 10 years of the Monetary Policy Committee. We have had some eminent witnesses, not least the former Governor of the Bank of England, Lord George, who came before us yesterday. Some people are asking whether it is through luck alone that the MPC has managed to keep our economy stable, with low interest rates and inflation. However, almost all the witnesses who have appeared before the Committee have rejected that notion. Instead, they have described the instability in the rest of the world and pointed to global difficulties such as the problem with long-term capital management that arose in 1998, and the Asian crisis of 2000. They attribute the success of our arrangements to the structural architecture that we have set up for both monetary and fiscal policy, and they have noted that the accompanying fiscal rules—the golden rule, or spending to invest, and the sustainable investment rule—are extremely important.
	Some of the witnesses have noted, very perceptively, that the Government's arrangements would not have succeeded without the accompanying welfare-to-work programmes, such as new deal. Unemployment stood at 3 million 20 years ago—Labour has created 2 million extra jobs, and that growth in employment has given the Government an opportunity to achieve economic stability. If the mix that I have described had not been available, the pressures already in the system would have rendered it impossible to ensure the stability that has given us record low levels of inflation and interest rates in the past decade.
	This is definitely the Prime Minister's final Budget—at least, that is what I am told. However, both he and the Chancellor deserve congratulations on their commitment to maintaining the stability and confidence in our economy—something to which all the political parties are now signed up. In the early 1990s, the Prime Minister and the Chancellor committed the Labour party to that project, thus inspiring confidence in a system that the City, the business community and society as a whole have all accepted. The International Monetary Fund and the Organisation for Economic Co-operation and Development have analysed the British economy, and they have remarked on its stability. Indeed, the IMF recently said that Britain had the best growth levels in the G7.
	Yesterday, Professor Charles Goodheart, an eminent former member of the MPC, told the Treasury Committee that the stability that Britain has achieved is remarkable. However, he warned that people might be taking it for granted, especially the young people who have grown up in the stable environment of the past 10 years. It is therefore important for all of us to work to ensure that confidence in the system and the credibility of the framework are maintained. That will be one of the many objectives of the Treasury Committee as it continues its inquiry into the MPC framework 10 years on.
	I want to look at the Budget measures in the context of a number of themes that have emerged from the current and recent work of the Treasury Committee: for example, the prospects for economic growth in the medium term; the role of the fiscal rules, particularly in the next economic cycle; the prospects for public expenditure and the role of the comprehensive spending review; the importance of education expenditure—in particular the delivery of capital expenditure on education, which exercised the Committee at the pre-Budget report stage; the need for transparency in demonstrating the success of the Gershon efficiency programme across Government, about which we have a number of questions; and lastly the importance of environmental considerations and the economics of climate change in Treasury policy, both now and in the future.
	The Budget painted an encouraging picture of economic growth and the Committee has noted the signs for business investment—the Chancellor's announcement today that business investment will grow by 7 per cent. is encouraging. The Committee was puzzled about why it had not grown in the past, given the prosperity and stability that have been brought about, so the Chancellor's announcement is welcome.
	Unemployment is falling, and the Chancellor mentioned that 220,000 more people were in work this year, which is extremely important. We need to continue the welfare-to-work programmes, not least the initiatives that have been mentioned, so that people aged over 55, in particular, can go back to the work force. One of the trends of the past year or so is that there are more older people returning to work, so we need to encourage them. A while ago, I pointed out that although people aged over 65 who work do not need to pay national insurance contributions, their employers do. Why does not the Treasury give a further boost to encouraging older people to work by ensuring that employers do not need to pay insurance contributions if their employees do not pay them? That would be an encouraging sign.
	From the Committee's inquiry into the MPC, it has become clear that for the past decade economic conditions have been exceptionally favourable. Indeed, the Governor of the Bank of England, Mervyn King, has described that decade as the NICE decade—the non-inflationary, consistently expansionary decade. Will those conditions be maintained for the next 10 years? Yesterday, one of the witnesses at the Committee said that we would have to be prepared for the fact that the next 10 years might be less rosy. The Governor has compared the economy to a car on the road; it is not that the wheels will come off the car, but that the car will be travelling over a bumpier road. We all have an interest in ensuring that we are realistic about what will happen in the next 10 years.
	The Chancellor's economic stewardship has been exemplary, as was his foresight in establishing the MPC. Global factors have helped, too; for example, the tail wind of globalisation has been beneficial for growth in our economy, as more individuals have entered the country to join the labour force. Will that situation prevail? We need policies to ensure that it remains a success.

John McFall: Witnesses have pointed out how favourable conditions are in the UK in terms of globalisation. The IMF has said that our growth is the fastest in the G7. In the Budget, the Chancellor showed how low our inflation is compared with America, France, Japan and Germany. We are doing well in that regard, as expert commentary tells us.
	There are risks to the international economy. In the US, there are concerns about the sub-prime lending market, but comments I have received from individuals in the City do not lead me to consider that the sub-prime lending market presents the same problems in the UK. However, we have to focus on the social conditions in lending. In the last Parliament, the Committee was firm about looking at responsible lending and borrowing. We must be careful that people do not over-extend, especially if they do not have claimable assets. The sub-prime market is important for financial inclusion, so I am pleased with the Government's response to our reports on that. I look forward to working with the Treasury on the 10-year programme for financial inclusion.
	Threats from the rapid unwinding of global imbalances remain, as do risks from increased protectionism if the Doha round cannot be brought to a successful outcome. I attended a conference in Africa last week. Representatives from the developing world asked how fair trade really was when they had no access to the markets of richer countries. They pointed out that development aid was no use in the longer term if they did not have free trade. The Doha round is extremely important and I urge the Government to make more commitment to it.
	The two fiscal rules—the golden rule and the sustainable investment rule—have played an important part in strengthening confidence in fiscal policy, and will also have a role in the next economic cycle. The Chancellor is to be congratulated for establishing the rules and the monetary policy framework. However, there have been comments that the fiscal policy framework is not as firm and transparent as the monetary policy framework. Changes to the dating of the economic cycle, even if justified by economic data, have not assisted with the understanding and interpretation of fiscal rules.

John McFall: The hon. Gentleman is a good, hard-working member of the Committee and I value his presence. In our last report, we argued that the end of an economic cycle provides the ideal opportunity to review and clarify the operation of the rules. No doubt, when the Chancellor appears before the Committee a week on Thursday I shall be alert to the hon. Gentleman's desire to ask a question at the appropriate time.
	In the case of the golden rule, the Treasury Committee has questioned whether it could be more forward-looking, to reflect tensions between fiscal planning, which looks forward, and the dating of the economic cycle, which looks backward. The evidence we have received, not least from the Governor of the Bank of England, suggests that we should be more forward-looking.
	The Committee has sought clarification from the Treasury of how it proposes to interpret the sustainable investment rule in the next economic cycle. Clarity on the issue will enhance credibility and strengthen the framework, and will help one and all in ensuring confidence in the whole system.
	On the prospects for public expenditure and the role of the comprehensive spending review, my right hon. Friend the Chancellor announced a tight envelope for the CSR in his Budget. However, he can expect much attention from the Treasury Committee in the months leading up to the announcement of the comprehensive spending review, especially in regard to allocations to Departments, and understandably so.
	It is important not to lose sight of the framework of public sector agreements and delivery agreements that are intended to underpin the spending settlements. Public service agreements have sought to link increased expenditure with programmes for reform and targets for improvement. Frameworks for reform and continuous improvement are all the more important in the context of a period when public spending is expected to fall as a proportion of gross national product.
	When the Chief Secretary to the Treasury appeared before the Treasury Committee, he informed us of plans for fewer but better PSA targets. That is encouraging, but Parliament, and Select Committees in particular, should be involved in the formulation of those targets to see that they are clear, measurable and linked to the resources available. I ask the Government to work more closely with all Select Committees to ensure that that is the case, because insufficient work has been done in that area.
	Along with the Chairman of the Public Accounts Committee, I am looking at the issue of financial reporting by the Treasury to Parliament. Financial reporting is complex; indeed, some would say that it is gobbledegook in many cases. If we cannot trace the money and we do not have that parliamentary accountability, confidence is reduced. The Treasury can expect further contact from me and the Liaison Committee on this issue in order to simplify the financial reporting to Parliament so that we can inform the House of where the money is and where it is going.
	There is also the issue of the importance of education expenditure, and the delivery of capital expenditure in education in particular. The Chancellor made that very much the centrepiece of his Budget. The themes that I have just referred to demonstrate the challenges in education spending. The Chancellor is right to stress the centrality of education expenditure. An educated and skilled work force is important if we are going to respond to the global competitiveness agenda in front of us. But I suggest that extra resources are not enough. It is the responsibility of the whole Government, including the Treasury, to ensure that the money made available is spent to deliver the objectives.
	At the last pre-Budget report hearing, the Chancellor appeared before the Treasury Committee. Members of the Committee, not least my hon. Friend the Member for Leeds, East (Mr. Mudie), questioned Treasury officials and Ministers thoroughly on what they do to ensure that the money allocated is spent. The answers received, particularly in the context of the "building schools for the future" programme, were not always convincing.
	I warn the Chancellor that when he comes before the Committee, that theme, in terms of education and new schools, will be raised. What about the money that is being allocated to those schools? When are they being built? When will they be completed? Those are simple questions and we wish to have the answers to them, particularly when the Chancellor comes before the Committee next week. More money for education is welcome, but attention needs to be paid to the capacity of schools, local authorities and Departments to deliver allocated spending, particularly in the context of capital programmes.
	Mention has been made about money going to front-line services by means of efficiency savings in the Chancellor's Budget statement. There is a need for transparency in demonstrating the success of the efficiency programme across Government. The Gershon efficiency programme is the most ambitious programme of its kind under any Government. The Chancellor today announced new figures on the progress being made, which is encouraging. However, the Treasury Committee has found it hard to match up the assertions of massive efficiency savings, achieved without reductions in service to the public, with the experience on the ground in areas such as Jobcentre Plus. Many of us in the Chamber have had representations from our constituents who work in the Jobcentre Plus area.
	It is also hard to correlate reported efficiency savings in Departments such as the Home Office with other evidence on effectiveness and financial management. In the last pre-Budget report, it was mentioned that the Home Office has achieved 95 per cent. of its targets on efficiency savings. That was at the same time as the Home Secretary called it a Department that was not fit for purpose. That just does not add up and therefore there is more need for transparency and clarity. Challenging targets for efficiency savings in the years up to 2011 have already been set, but the Government need to attach priority not only to managing the new efficiency programme within government, but to ensuring that it is reported in ways that ensure parliamentary and public confidence in its delivery.
	I come to the importance of environmental considerations and the economics of climate change in Treasury policy, now and in the future. The Chancellor is right to put environmental considerations at the forefront of the Budget. He is also right to stress the role of incentives, as well as taxation, in changing behaviour. The carrot-and-stick approach works more than anything. Taxation can be a blunt instrument in an environmental context. That is clearly true for aviation, where both current and proposed taxation instruments have been criticised. When representatives of the aviation industry appeared before the Committee during our inquiry into environmental taxation, they were not very clear or persuasive about what they were doing in this area. It is time for the industry to raise its game and to participate fully and constructively in the public debate, rather than heckling from the sidelines. After all, the industry is not in the emissions trading scheme in the European Union until 2011. It does not pay taxation on its fuel, unlike the ordinary motorist or businesses in the country. It has a window of opportunity between now and 2011, when it will go into the emissions trading scheme, to show its metal and to show what it is going to do in terms of the environment. I make a plea to the Government to ensure that there is a fair price for carbon in the emissions trading scheme. There will be a lot of lobbying going on in the next few years, but if we do not ensure a fair price for carbon in the emissions trading scheme, the merits of that scheme will be lost.

Nigel Evans: The right hon. Gentleman mentioned Africa. He will know that there will be discussions at the G8 meeting in June about the commitment that the Government have already made to Africa in the form of £1.5 billion to help to fight HIV/AIDS. Will he join me in asking the Government to ensure that we stick to that commitment and try to persuade as many Governments as possible throughout the developed work to help fight the scourge of HIV/AIDS in Africa, which is clearly one of the problems that is holding back Africa's development?

John McFall: The hon. Gentleman makes a relevant point. While we have a benign economic environment and low interest rates at the moment, the Committee will examine what could happen in the future. The debt and leverage that the hon. Gentleman mentions could have implications in an environment that was less benign.
	I said that we would be examining hedge funds. The main issue is whether a systemic risk is involved, given that it is difficult to determine where the risk is. The Amaranth hedge fund went down and lost £6 billion, but that did not create a systemic shock in the financial environment, so perhaps the situation is robust and there is a spread of risk. However, I know that quite a number of people are worried about that spread of risk.
	The Committee will also consider insider trading. When the Financial Services Authority examined the matter, it painted a fairly bleak picture. The FSA has not made great progress—it is difficult to do so—but we should consider it when we examine transparency.

John McFall: Exactly. My hon. Friend outlines the situation cogently and cites a reason why we will examine the issue. A lot of concern about insider trading has been expressed from the City to myself.
	I noted reports on the front page of today's  Financial Times about the Barclays-ABN Amro amalgamation, which throws up quite a bit of interest, especially from the point of view of the FSA. Barclays says that it will have its headquarters in Amsterdam and that it will have a Dutch person as its chief executive. Such a big merger across European frontiers will mean that negotiations about supervision will need to take place in both countries, although there will be supervision in each jurisdiction. Given the pivotal role that Barclays plays here and that it will play in Holland, there is a need for the Committee to discuss the matter with the FSA because such a path has not been travelled down too much previously.
	The Financial Secretary has produced a consultation paper on unclaimed assets. The Treasury Committee went on an enjoyable but hard-working visit to Dublin—I think that the hon. Member for South-West Hertfordshire (Mr. Gauke) would agree—on which we worked from early morning until late at night and just fed ourselves in between. The Irish Government have passed legislation on dormant accounts, so the information that we discovered on our visit will help the legislative process as such a measure goes through here. There are two issues involved in dormant accounts, the first of which is reconciling individual savers with their accounts. The Irish Government put a 15-year limit on that, so if anyone comes back within 15 years, they can get their money straight away. Indeed, even if they come back after 15 years and have the relevant proof, they can get their money. Any measure will need to build people's confidence that we are aiming to reconcile savers with their accounts.
	The second issue is that if the accounts are not reconciled, they are given to an independent body that distributes the money for the sake of the community. I suggest to the Government that the Irish Government have undertaken that task very well, and there are many lessons to be learned there. I can also tell the Government that the amount that has resulted from that scheme is eight to 10 times the original estimate of the financial institutions in the Republic of Ireland. That is a lively issue, and the scheme could benefit communities in our country, as well as individuals. If the Government go about their business in that sensitive way, they will certainly have the support of the Treasury Committee. I can tell the Paymaster General that the Committee will ensure that it raises some very good issues for her to consider. I am sure that she, if not others, looks forward to coming back before our Committee, as she always does.
	I thank you, Mr. Deputy Speaker, for the opportunity to comment on the Budget, which will be welcome to families, young people, and business. Businesses told me that they needed a simpler system, but more than anything they need a commitment to the long term. With the corporation tax reduction announced today and the reduction in personal income tax, business has that commitment. We have a long way to go on that particular agenda, but we have heard encouraging statements from the Chancellor today, and I end by congratulating him and the Prime Minister on the past 10 years of financial and economic stability.

John Redwood: My hon. Friend makes an extremely good point, which I endorse. Off the top of my head, I do not have the numbers about how much fiscal drag amounted to, but the overall totals were colossal, and we know that the average family pays £1,300 a year more in tax than they did when the process began. Quite a bit of that is the result of fiscal drag, but some is the result of policy decisions made by the Chancellor.
	That period also illustrate that all clouds can have silver linings, because over the Conservative years, we had been driven deaf by Labour spokesmen and Labour Back Benchers telling us that there was very little wrong with Britain that a big increase in public spending would not put right. We also were led to believe that there was somehow something in us that made it impossible for us to shower enough money on public services, and if only Labour could take over from us, it would shower enough money on public services and all our problems would miraculously vanish. The Chancellor has conducted a bold and historic experiment—unfortunately, at the British taxpayer's expense—but over the six years, he has proved conclusively that it was not Conservative parsimony that got in the way of really good public services. No one can now deny that huge sums of money have been tipped into health and education, and several other services, but nor can any fair-minded person deny that there are still real problems with those services, many of them reminiscent of the problems for which Labour used to criticise the outgoing Conservative Government in the 1990s. I hope that it is common ground across the House, at least between the Front-Bench teams, that tipping lots of extra money into those services without reform or change, and without asking for something for that money, is not the right way forward. We need to find preferably a consensus way of improving public services that absorbs less cash and delivers more for the money.
	We now come to the third and probably final phase of his Chancellor's tenure. There again he is trying to prove an extremely important Conservative adage for us, and I admire him for doing so. He now is trying to prove that there is indeed waste in the public accounts, and that is possible for a Government to tease out that waste and redeploy the money more sensibly and profitably in the public services. He has not quite got to the point yet where he would like to share that with the taxpayer, but he has certainly got to the point where he would like to give the taxpayer better value for money. The Budget is built on the proposition that £26 billion a year by 2010—that money is currently spent wastefully and unnecessarily—can be spent more productively and sensibly by strengthening front-line services, primarily in health and education. I should be delighted if the Chancellor succeeded in doing that. I think that it is quite a modest ambition, given the scale of waste in the public sector, but I suspect that he will find it difficult to do so.
	I felt that the Chancellor learned an important lesson when, in a previous Parliament, Conservatives were making the argument that we would run things better and take waste out of the public accounts. The Chancellor suddenly shifted from saying that that was impossible—that had always been his response in previous years—to saying that, yes, it was a very good idea and of course, he had thought of it first. He set up the Gershon review, which identified £22 billion a year of wasteful and unnecessary expenditure in the public accounts that the Government intended to tease out and redeploy. We now learn that Gershon underestimated a bit, and the Chancellor thinks that the sum could be at least £26 billion. We also know from the very good work of the Treasury Committee and others that the Chancellor is finding it difficult to secure all the £22 billion of the Gershon changes, but there is a simple way for him to do so, as he could strengthen his control over the public sector pay roll.
	I was pleased that in the last quarter of 2006, the numbers on the public sector pay roll in aggregate fell by 22,000. That was the first time that we have seen a move in that direction after a big explosion of posts. Before Labour Members make their usual silly points, I think that we need all the nurses, doctors, teachers and police officers that we currently have, and we need to recruit more in the years ahead. The good news is that they are a tiny fraction of the huge public sector pay roll, and with efficiency and natural wastage—not by being nasty or sacking people—we could make big changes to the numbers that we need to employ across the public sector.

John Redwood: I do not think the hon. Gentleman was any better the second time. Maybe it was the sample that I happened to meet, but the business men all said to me that the attraction of Ireland was the lower tax rate. I do not know whether the hon. Gentleman knows how business people make their forecasts and make their decisions about where to invest. They usually work out what they think will be the revenue line, then put in what they think will be the cost line, and strike something called a profit. They then look at how much the Government will take of the profit and what remains at the end. If more remains at the end in one country rather than another, they are tempted to come to that country. That has worked well for Ireland.

Mark Durkan: The right hon. Gentleman should realise that what the social partnership framework agreements did was to set discipline in terms of tax rates, they agreed the tax framework, and they also provided for wage restraint, so Government were able to negotiate that with business, trade unions and other social interests on a multi-annual basis. That provided the environment that has attracted businesses into Ireland.

John Redwood: The policy came from thinkers around the world who pointed out to Governments that that always works. The Irish Government had the common sense to do it, but the British Government have not yet had the common sense to implement it properly.
	That brings me to the corporation tax rate in the United Kingdom. I am pleased that the Chancellor understands that there is a problem out there. Britain was one of the lowest tax countries in 1997. The Chancellor would say that he has already brought the headline rate of corporation tax down on his watch. That is true, but he must realise that it is a very fast moving and competitive world out there. While he has been bringing it down a little, many of our great competitors and friendly nations in the world beyond us have cut their rates much more quickly, so we have gone from being relatively good value to being relatively expensive.
	In the global supermarket for the location of business and investment that we now live in, that means that Britain is losing out. Investments no longer come to Britain because the tax regime is not attractive. A lot of manufacturing is exiting Britain and a lot of new manufacturing investment is going elsewhere. We find a country such as the Netherlands, with quite high costs in other ways and the same EU regulations, winning rather well against us because it has a much more competitive tax regime. Shell has decided to amalgamate its headquarters in the Netherlands to save on taxes, which will be a tax loss to the Treasury. We see discussion in the press about Barclays possibly moving its head office overseas after its merger. Of course, its domestic operations will still be taxed in Britain, but that will be another tax loss.
	At some point the Treasury has to take this more seriously than the Chancellor has done so far. If he wishes to preserve the tax takes that he has, he needs a competitive tax rate. There is no choice. It is absurd that so many Members have this wooden approach that says: "If we cut the tax rate, we will lose this much revenue, we cannot afford to lose that revenue, so we will keep the tax rate up." The truth is that if our tax rates are kept at a fixed level and the rest of the world cuts, we will lose revenue because we are not responding. The other wonderful truth is that if we are bold enough to cut tax rates so that they are sufficiently competitive, we may shortly experience a big increase in revenue because we benefit and the less competitive tax jurisdictions do not.
	The Chancellor told us that he is cutting the corporation tax headline rate from 30p to 28p in the pound. One cheer for that—it is very good news, because the headline rate is what people look at. The not so good news on the same page of the Red Book is that that is more than paid for by the money that he is clawing back by cancelling some of the credits and offsets allowed against the 30 per cent. rate. That will make Britain a bit more attractive for certain kinds of companies that do not benefit from the reliefs that he is removing or reducing, but other companies will be worse off, so it exacerbates rather than eases the problem. One cheer for the lower rate and one cheer for the companies that will benefit, but the Treasury should understand that it has not solved its problem, because many companies will still be worse off. The overall result is to take a little bit more from the companies sector, and a lot more in the case of some areas and some companies.
	The Chancellor's record is often defended around one central proposition. We are told that his act of genius was to make the Bank of England independent when he came into office 10 years ago and that everything else has flowed from that excellent decision. My colleagues and I are very happy to have an independent Bank of England, but we do not believe that it has been as independent as the Chancellor has advertised. Nobody can get away from the fact that at a crucial time just before the last election the Chancellor wrote a very important letter to the Monetary Policy Committee of the Bank of England saying that he wished to change the basis on which its targets and instructions rested, and he shifted it from the retail prices index to the consumer prices index. He well knew at the time that the CPI was going up much more slowly than the RPI, so he must have done that knowing that it would keep interest rates lower than would otherwise have been the case. That was very convenient ahead of a general election. Unfortunately, there has been a price for that, because after the general election, with interest rates kept down, we discovered that inflationary pressures had built up. Because of its new CPI target, the Bank of England's committee has probably had to raise rates by more than would have been the case without the political intervention.
	We can see the cost of those interventions—I am sure that there have been more than one—in that over the 10 years of an independent central bank people in Britain have had to pay more to borrow money, on average, than people in the United States of America, which has grown more quickly, in Japan, which in the early part of the period grew hardly at all but has now been growing quite respectably, or in euroland, where performances have been very patchy but where, on average, growth has been slower than in the United Kingdom. It is worrying that we have had to pay a premium over American rates when America has performed so much better. That should not necessarily tell us that an independent central bank is wrong but that our bank was perhaps not independent enough. It suggests that because the Chancellor's fiscal policy was pulling in the opposite direction to the direction in which monetary policy had to go, the MPC had to put up interest rates more than it would have done. Because the Chancellor was not following prudence between 2000 and 2006, there was a price for all of us in higher borrowing costs—not only in mortgages for those trying to buy a house in very expensive Britain, but for those borrowing money to run successful businesses.
	Over the past 10 years we have seen a big let-down on productivity. When the Chancellor came into office, he told us more or less to judge him by productivity and said that he could take a number of measures that would boost productivity. The irony is that in the area where he had most control—the public sector, where he had riches beyond most people's dreams that he could have used to buy improvements in productivity—there has been a collapse in productivity. So bad is the position that the Government have asked for changes in the figures and have withheld a proper series of figures from us. There appears to have been no productivity growth in the public sector at all. It beggars belief that someone can perform that badly when they had so much money to spend on new technology, new people and new skills, which should have enabled things to be done in a much better way.

John Redwood: I have allowed the hon. Lady to intervene many times and she is trying my patience. She has made several foolish points, and I do not think that the House wants to hear another one.
	The Chancellor has fallen behind very badly on productivity. His micromanagement from the centre has not helped British companies to become more productive and it has got in the way of the public sector.
	When the Chancellor was in opposition, he used to think that a good night out was spending time poring over the balance of payments figures. He would come rushing into the House the next day if he found some bad balance of payments figures, put them to Ministers, and personally blame them for the imbalance between exports and imports. Since he took over as Chancellor, we have had enormous balance of payments deficits—I think that he has set new records—and we are not told anything about them at all. Again, they did not get a mention today; all the figures that he chose to highlight were ones that he thought were favourable. The House should remember that there is quite a price to pay for the de-industrialisation of Britain that has continued under this Government, with 1 million manufacturing jobs lost on their watch. The price is there in the visible trade balance, where there is an awful lot of red ink. We import a great deal of the products that we need from elsewhere in the world because we are not making them in Britain. Meanwhile, 5.3 million people of working age sit on benefits. I know that the Chancellor wants to do something about that, but it is getting a bit late—when is he going to do it? He should be much angrier about those 5.3 million people and find some way of getting them back into legitimate employment so that we can start to fill in some of the holes in the balance of payments.
	My conclusion on the Chancellor's 10 years is this: there has been no major disaster, and for that we are very grateful. The inheritance was strong and good. For the first three years he did not do too much damage to it apart from the huge mistake over pension funds. For the next five years, he proved beyond doubt that just spending huge sums of money does not sort out the public services sufficiently. At the same time, it damages Britain's ability to compete, in turn damaging our ability to employ those 5.3 million people who do not have jobs and our ability to raise our living standards as quickly as America, Ireland or the other success stories around the world.
	This Chancellor has put Britain at the bottom of the pack of English-speaking countries—the pack to which the Chancellor never refers—though from time to time he has put us at the top of the European pack. That has not been very difficult, as Europe has gone through a dreadful time with the wrong model, showing once again that the high-tax, high-waste, high-spend approach does not produce a happy country or even good public services.
	This Budget is based on a central con on the income tax proposition. Most people will feel very let down when they read their newspapers tomorrow and see that they are not better off in the way that the Chancellor was perhaps trying to hint with his famous announcement at the end of his speech.
	When it comes to the corporate sector, the Government should not run away with the idea that they have done enough. They have acknowledged the problem and will have helped some companies a little, but we need a considerably better tax package if we are to stop more Shells and Barclays either going abroad or thinking of going abroad, or if we are to bring more large companies into Britain, saying, as they do with respect to Ireland, that this is the place where they wish to come.
	If Labour Members believe that we also need a social compact in order to attract them, I look forward to them setting out the details so that we can debate them. I think that most of them already know in their hearts that what will bring the punters in from around the world and from the global marketplace is a much more competitive tax system. Unfortunately, this Budget does not deliver it.

Peter Bottomley: Let me get through the rest of my list, as that may save a number of interventions.
	Is it true that the UK's structural budget deficit is, at 2.6 per cent., the largest of all the major EU countries? Is it higher than Italy's structural deficit? Is real take-home pay falling? If we take the increase in the retail price index to be 4.4 or 4.6 per cent. and say that average earnings, excluding bonuses, rose by 3.7 per cent., is that a fall in real pay?
	The Government claim that the 3 per cent. rise in the prescription charge is less than the rate of inflation, but pay for nurses is going up by 1.9 per cent.—less than the rise in the prescription charge. Is that correct? How will that affect nurses' take-home pay in the forthcoming year? What is the forecast for that?
	When a Treasury Minister next stands at the Dispatch Box, will he say how business investment as a proportion of GDP last year compared with the figure for 10 years ago? Is the present level the lowest on record? Was last year's 5 per cent. savings ratio half of what it was in 1997?
	I am willing to praise the Chancellor for some of the good things that he may have done, and it is clear that the hon. Member for Newcastle-under-Lyme (Paul Farrelly) would like to join me in asking for the whole picture. There are some things for which the Chancellor does not take credit, or even mention. That sort of selection is normal and natural, but it reveals the right hon. Gentleman to be an ordinary Chancellor, and not an extraordinary one. If I were to try to come up with something for his economic gravestone, I might say that his RIP was the RPI.
	Is it right that the trade deficit is set to rise to £60 billion, the highest on record? Is it right that there are a million more people in this country who are not in education, employment or training than there were in 1997? The Chancellor talks about the increase in employment, but how many of the people involved were not in this country 10 years ago? They may have come here to take advantage of economic opportunities. If so, they contribute to our economy, but they do not offset the number of people out of work and not in training.
	The Chancellor deserves praise for what he said about child benefit. I have long argued that the best way to help people when they have children is to make sure that they have money, resources or cash. It is important that those resources goes to families and households with children, regardless of whether there are two people earning, and of whether there are two adults present.
	Child endowment is one of the most important functions of Government. We spend a lot of time arguing about appropriate levels of pension or state benefit income for people in retirement, and it is right that we do—but most retired people have at least had an opportunity during their lives to earn money or to put some by, through growing pension entitlements. Children cannot do that; the law does not allow them to, and their age prevents them. We must make sure that people who have children can give them a decent standard of living.
	That matters a great deal, but we will never be able to ensure that every working person can earn enough at work to support children. Conventionally, child benefit comes in when a family goes from having two incomes and two mouths to feed, to one income and three mouths to feed. Arguments will continue about the appropriate levels of working families tax credits, or other benefits, but I have always believed that child benefit should be the centrepiece of the system. I learned that from the writing and campaigning of Eleanor Rathbone, and from the work of Sir Brandon Rhys-Williams, a former colleague in this House.
	The Chancellor did not mention local government finance. When we consider the burden of taxation on people we have to include the amount of council tax they pay. Whether the Lyons review has not produced the result the Government wanted, or whether there are awkward decisions to be taken and difficult approaches to identify, is not for me to say. However, until we can look at the overall taxation burden we cannot look at equity and fair distribution over the life cycle between different income groups and owners of different asset classes.
	I hope that my party will find a way to make sure that local government has a buoyant source of income—perhaps even a set of buoyant sources. Central Government benefit from rises in revenue from value added tax, excise duties, income tax and national insurance, including fiscal drag as the economy and incomes grow. Local government does not. Until local government can expect a share of economic growth, with more money and more spending decisions, and a variety of income sources, there will continue to be tensions between central Government and local government, and between local government and taxpayers. We need to move forward from that situation.

Nigel Evans: I suspect that, after listening to Budgets like this over the last 10 years, Members left to make sure that we got out hands on the Red Book so that we could read the small detail to find out what was in the Budget, not just what the Chancellor said at the Dispatch Box.

Stephen Hesford: And the Leader of the Opposition—I am obliged to my hon. Friend.
	The speech that I wanted to make nearly hit the buffers in the sense that the wind was taken out of my sails. However, I want to place on the record my thanks to the right hon. Member for Wokingham (Mr. Redwood) for making it relevant. One of the traditional knockabouts in these debates—which I though was going to go missing, but which, certainly from my point of view, has come back into play—consists of the doom and gloom that Opposition Members put about and the talk about black holes. Other colleagues mentioned all that sort of stuff. In preparation for that, I looked at the financial press with a little care over the past six weeks or so to see what was being said in the run-up to the Budget. It is often said in this place that much of the press is not necessarily friendly to the Labour party —[Laughter.] I hear laughter from Conservative Members. I am not sure which papers they read—I see that no one wants to intervene to tell me.
	If, as the right hon. Member for Wokingham would have us believe, the Chancellor has got it so wrong in his Budgets over 10 years, let us, almost counter-intuitively, consider the situation in the City of London, which is traditionally thought of as not looked after efficiently or well by the Labour party. A reputable broadsheet that is not always favourable to the Labour party published some figures on the City of London in the past few weeks. It showed that 4.6 million people were employed in London, which is 15 per cent. of the UK total. The number of people employed in the City is 340,000, while up to 1 million are involved in support services. Some 9 per cent. of our gross domestic product is produced from financial services, which is up from 7 per cent. 10 years ago. The City of London's share of the global foreign equity market is 43 per cent., and it accounts for 36 per cent. of global derivates. The City accounts for 31 per cent. of world currency trading, which is more than New York and Tokyo combined.

Stephen Hesford: The hon. Gentleman makes his point.
	The final statistic that I will cite is that the London commodity market's share of world trade in metals is 90 per cent. That piece of financial journalism thus, perhaps counter-intuitively, supports the framework and environment that my right hon. Friend the Chancellor has set up.
	I have in front of me a copy of the 4 March edition of  The Sunday Times, which includes a column by David Smith. Those who have followed the journalistic career of David Smith will know that he is not necessarily a friend of this Government. Indeed, I recall that during the couple of years before we took power in 1997, part of his advice to those who wanted to make investments around the world was that they should leave the country, which shows his pedigree. His piece in  The Sunday Times was called—this is a description of the economy—"These are the best years of our lives". How did such a respected journalist, who is independent of the Government, come to that view if what Conservative Members often say is true?
	David Smith's article included phrases such as
	"as good as it gets"
	and
	"It is hard to think of a better ... period in Britain's modern economic history."
	On growth rates, he wrote:
	"The average growth rate has been 2.8 per cent. better than Britain's ... long-run average of 2.5 per cent. ... The economy is nearly 5 per cent. larger than it would have been".
	That means that some £60 billion to £70 billion extra wealth has been created than would have been the case under the long-term trend growth rate. He also writes:
	"Inflation since 1992 has averaged 2.6 per cent."
	which is low in any historical circumstances. We still have that kind of average inflation rate. He also talks about stability, which I would say has been a key economic driver, and I am sure that Members in many quarters of the House would agree.
	Important though inflation is, we should also take note of the surrounding absence of volatility. In previous economic cycles, and in the 18 years before the Labour Government, there was a trade-off between growth and inflation, but the volatility has come down sharply. In David Smith's words,
	"It hasn't just been a case of no more boom-and-bust. There have also been no more wild swings in inflation."
	That is good for business, and it is certainly good for my constituency. He rounds off his point on stability by saying:
	"Britain's performance in terms of stability has gone from being the worst in the advanced world to something near the best"—
	and of course that success story continues.
	We should not just take David Smith's word for it He cast around for other unlikely sources of support to offer an objective view of the Government's record, and he quotes Professor Tim Congdon. Those who have followed the area of policy that we are discussing for a number of years know that Professor Tim Congdon is not acknowledged to be a Labour supporter. In fact, as David Smith says, Congdon was given a CBE by the Tories, but not necessarily for services rendered, but we will not go there. Congdon says that after
	"two decades of boom-and-bust"
	we have the most stable and successful economy of modern times, with not only low inflation, but a short, sharp drop in volatility. He says:
	"The improvement on...inflation...has not been at the expense of the so-called 'real economy'".
	In other words, there is a firm basis for the belief that what we see as the proceeds of success—investment in our public services—are based on reality, contrary to what Opposition Members would have us believe.
	One point that is raised, almost like a kiddies' scare story, is the subject of debt. It is often said that we are in a kind of overblown bubble and have a debt-ridden economy. Congdon has a view on that. On the idea that we are drowning in a sea of debt, he says that there is probably more nonsense talked on that issue than on anything else. He says that it is consistent with a grown-up economy that people should have control over their own lives, and that included them making decisions on debt. He goes on to say:
	"Generally, people have a far better understanding of their own particular financial circumstances than anyone in Westminster, Whitehall or the London-based media."
	The article then quotes a few figures:
	"Unsecured debt is just 3 per cent.-4 per cent. of household wealth. All household debt is about 1&frac12; times annual income, but the net wealth of the sector is seven times income. The surprise is not that debt has risen but, given the low-interest-rate environment, it has not risen more."
	That once again emphasises the idea of stability.

Danny Alexander: The hon. Gentleman is quoting with approbation the words of an economist who would like Britain to, among other things, withdraw from the European Union, so we need to be careful when weighing up the merits of his argument. Is the hon. Gentleman really saying that personal debt totalling £1.3 trillion is something that we should not worry about too much? Does that not reflect the fact that one element of the Government's record to which he has not referred is the widening of the gap between the richest and the poorest in society, and is that not a legacy of which Labour Members should be ashamed?

Stephen Hesford: The hon. Gentleman has only just come into the Chamber, but if he had followed the debate he might have had something more apposite to say. He misunderstands entirely the point that I was making. I was not quoting Congdon verbatim to demonstrate his absolute support; I wanted to show that someone on that side of the economic debate supports the notion that we have achieved stability. He says that the economy is not the scare story that Conservative Members would have the public believe.
	The economy is in good shape, despite the list of questions posed by the hon. Member for Worthing, West (Peter Bottomley), who would not allow me to intervene. I do not know what my hon. Friend the Economic Secretary will say in due course, but it is not for me to answer those questions. My constituents are not professional economists or London-based financial journalists, but they share the genuine concerns of hard-working families in constituencies throughout the country. Given the climate, which is sometimes exaggerated, mums and dads in my constituency have some worries, but it is important to set them against the background of stability. People are worried, even though the economy is doing well, so we must find out what the disconnect is. This winter, some of my constituents were worried about utility prices, but British Gas and other major utilities have dropped their prices considerably, which I welcome. People are worried about council tax, but I am pleased that my local authority will introduce a council rise below the national average. There have been three interest rate rises in the past six to nine months, which is worrying for people with mortgages.
	Nonsense is talked by Opposition Members about the state of the NHS, and they do so to create uncertainty and worry. That is the climate that my constituents have experienced for the past six to nine months. It is counter-intuitive but, unbelievably, the latest polling evidence suggests that the Tories are favoured for their handling of the economy. I was genuinely looking forward to the Budget, as I hoped that it would answer those concerns and worries. My hon. Friends may agree that in the past six to nine months we have failed to construct a narrative or connect with our constituents to enable them to understand where the Government are going. There was therefore a big ask for the Chancellor, as we wanted him to try to answer those serious concerns. Like every constituency, mine is composed of different sectors of society, and about 20 per cent. of the electorate—that is one of the highest percentages in the country—are pensioners. What did the Chancellor do with respect to pensioners? What I am about to say deals with a sector of the pensioner public who have missed out on our previous efforts to tackle pensioner poverty—those who are just above the pensioner poverty line and sometimes complain that they do not have access to some of the benefits. Since 1997 the Chancellor will almost have doubled the tax-exempt income of pensioners who pay income tax. That will be a significant benefit for a considerable number of my pensioners. The other item that I warmly welcome is the raising of the level of pension credit, which will help the middle sector of my pensioner population.
	By far the largest part of my population, as is probably the case in most constituencies, are hard-working families with children. The Chancellor has gone a long way towards settling their worries. First, tax credits for a typical family with two children will effectively wipe out income tax liability on an income of £450 a week. That will be extremely helpful to many of my hard-working families. Secondly, child benefit will rise to £20 for the first child by 2010. That works out at more than £1,000 a year. The House should reflect that, when we came to power, the Major Government had been chipping away with a view to abolishing the child benefit. That was the climate as I recall it.

Edward Balls: Lest there is any possibility that my hon. Friend might have been unsettled by some of the interventions from Opposition Members, he may recall that the Chancellor said in his speech that he is taking action to address the issue of small companies avoiding paying their due through artificially incorporating in a way that will not raise the tax burden on the self-employed and small businesses overall, and that the small companies rate will be raised in three stages from 20p to 22p in 2009, recycling all these revenues to legitimate small businesses investing for the future Does my hon. Friend agree that if Opposition Members had listened to the Chancellor's speech more carefully they might have understood the point the first time?

Stewart Hosie: May I comment first on the corporation tax change? It should have been greatly welcomed, as a cut in corporation tax is something that we have called for, although I am not sure whether the 2p cut will be sufficient to give Scottish business the competitive advantage it needs in order to close the 25-year 30 per cent. growth gap with the rest of the UK. When I see that in 6two years' time the change to capital allowances on plant and machinery will generate £2.27 billion-worth of yield, yet the corporation tax change will only generate £2.23 billion, I am not sure whether, rather, it is a case of robbing Peter to pay Paul.
	I welcome the additional investment of £8 billion in the pension financial assistance scheme. I will look into the detail, of course, but I very much hope that there will be enough money for it to work to assist many of my constituents who have suffered from the failure or collapse of their occupational pension schemes. We all recognise that the biggest threat that we face globally is from terrorism, so I very much welcome the increase in the security budget to £2.25 billion.
	I also welcome the announcement of extra money for shared equity. Again, we will have to look into it in more detail, but I hope that it will provide new affordable homes. I have been through the Red Book and cannot see any forecast future revenue from planning gain supplement. I mention that in the context of the shared equity scheme and the Budget. Many hon. Members are very worried that, if the PGS were to proceed and increase the price of land by, say, 30 per cent., even the shared equity scheme announced today might not be able to deliver the number of affordable houses that the Government may expect.
	I should also like to comment on the announcement to sell off the student loan debt. That will certainly generate quick revenue for the Treasury, but it is my understanding that to keep the interest rates charged to ex-students low, there will still be a cost of about £1 billion to the taxpayer. Although, as I say, it will generate some quick revenue for the Exchequer this year, there will be a long-term liability to the UK, while it does nothing, of course, to help those paying off the loans for the time being.
	The Budget is supposed to lay out to the House and the country the economic position in which we find ourselves, to measure the success or otherwise of economic policy and to map out the Government's future plans, expected revenue, spending, inflation, debt and so forth. It underpins the social and economic policy that the Government intend to deliver in the year ahead.
	The Chancellor has set out today what he expects in terms of future investment in—and, indeed, reform of—the public sector. He talked about discipline in public sector pay, but he ignored any real assessment of the many economic reforms and savings that he has made. We now know from the National Audit Office that only £3.5 billion of the claimed £13.3 billion of savings can definitely be said to represent efficiencies. Some of the rest may, but the NAO says that more than £3 billion of those savings do not demonstrate efficiency or may be substantially incorrect.
	In previous Budgets, the Chancellor has spoken more about his reform of the public sector, particularly the loss of jobs. That was not mentioned at all today and I wonder whether the balance has been struck correctly in terms of losing jobs. For example, at the moment HMRC currently has a million pieces of unopened mail and has spent £160 million on agency staff to cover some of the manpower gaps that appear to exist.

Stewart Hosie: The hon. Gentleman might say that, but I think that my colleagues were being critical of the fact that the Chancellor mentioned Wales on only one occasion in the Budget statement. I think that he mentioned Scotland twice. That is about average for the past 10 Budgets.
	The Chancellor said last year that inflation had been virtually halved to 2 per cent., and that long-term interest rates were at their lowest for 40 years at just 4 per cent. Over the past few months, the consumer prices index reached 3 per cent. in December and 2.7 per cent. in January, and the retail prices index hit 4.4 per cent., moving down to 4.2 per cent. In January, however,  The Scotsman, quoting the Capital Economics consultancy, identified that pensioner inflation was actually running at 9 per cent., and that real inflation for households on a modest income was hitting 4.6 per cent. We know that today the RPI has hit 4.6 per cent. and that the CPI has hit 2.8 per cent. I am troubled that, when the Chancellor is looking at pension increases and forecasts, he is basing those rises on inflation rates of 2.8 per cent.—or 4.6 per cent. if we are lucky—when real inflation, especially for pensioners, is certainly hitting 9 per cent.
	No Budget would be complete without the repetition of the assertion that there have now been 59 quarters of unbroken economic growth, and no Budget would be complete without me saying, "Except in Scotland." In Scotland, under this Chancellor, there have been four quarters of falling growth, a full-blown manufacturing recession and only six quarters in which growth outstripped that of the UK. To look at that another way, since the second quarter of 1999 and the start of 2006, manufacturing GVA—gross value added—in Scotland has fallen by 12 per cent. against a modest rise in the UK.
	The Chancellor also said, as usual, that the UK was doing very well economically. I think that he said that its economy was growing faster than those of the EU and the G7. However, information published today says that the economies of the UK, the G7 and the eurozone all grew by 2.75 per cent. in 2006; so, at best, the UK is marking time; it is not powering ahead as the Chancellor would have us believe.
	The Chancellor also talked a lot about his various golden rules and fiscal rules, and in particular about keeping debt below 40 per cent. of GDP over the economic cycle. The problem is that the debt is being hidden. In particular, the Government's private finance initiative debt is off balance sheet. We know that there are 48 major private finance initiative and public-private partnership projects, with a capital value of £2.7 billion, in Scotland. The Edinburgh royal infirmary project had a capital cost of £184 million, but a repayment of £1.26 billion over its lifetime. We also know about the spectacular failure, in terms of value for money, that led to the Inverness airport terminal—with a capital cost of £9.6 million—being bought out with taxpayers' money to the tune of £36 million. The problem with PPP/PFI is that the cost of borrowing—at rates of between 2.5 and 4 per cent. above public borrowing rates—costs the Scottish taxpayer about £110 million a year extra, which is enough to fund about £2 billion worth of new public investment.
	The UK position is even worse. The 2006 pre-Budget report showed total outstanding PFI payments, over 30 years or so, of £158 billion, which is up 11 per cent. from the £142 billion reported nine months earlier in the 2006 Budget. The cumulative effect today is that payments of £169 billion are to be made up to 2032. These are huge, frightening numbers.
	The Chancellor repeated his claims of improving research and development in business, and I welcome the extra £100 million for R and D tax credits. I have raised this issue on a number of occasions and I am glad that that extra money is being put in. It is worth noting, however, that the rates of spend on R and D as a proportion of GDP still pale into insignificance compared with those in our major competitor countries.
	The Chancellor also made great play of those who are in work, but it is worth reminding ourselves that, in Scotland, we have lost 90,000 manufacturing jobs since Labour came to power. The figure is about 1 million in the UK.

Stewart Hosie: We need to consider all the R and D funding pots in the round. The hon. Gentleman was right to refer to the one that he did, but he will know that there are separate funding pots for research and development in Scotland—SPAR, SPAR plus and SEEKIT—with different programmes available in England, and some UK-wide ones. Some of the money that used to be in the pots to which he referred may now be in R and D tax credits. Yes, that is wrong, but we need to view the issue in the round and work out how we can increase total R and D expenditure rather than concentrating on what has been taken from one particular pot.
	What the Chancellor did say today was a great deal about the environment. Perhaps the Government can answer a couple of questions. When will they finally act to end disparity in charges for connection to the national grid? This is an old story. It costs more than £20 per kW to connect to the grid in the north of Scotland, but a subsidy of £8 per kW can be paid in the south of England. The Government promised to do something about that. I raised it with the then Secretary of State for Trade and Industry, the right hon. Member for Kingston upon Hull, West and Hessle (Alan Johnson). during last year's Budget debate, and with the Secretary of State for Environment, Food and Rural Affairs on 30 October last year.
	The Chancellor also made great play of carbon capture and storage, but I fear that we have heard all that before. In the 2005 Red Book, he said
	"The Government is therefore examining how it might support the development of CCS in the Climate Change Programme Review, including the potential for new economic incentives."
	In his pre-Budget speech in the same year, he said
	"Carbon capture and storage protect the environment from carbon emissions by containing them at source".—[ Official Report, 5 December 2005; Vol. 440, c. 612.]
	In his 2006 Budget statement, he said
	"Following a joint study with the Norwegian Government, we have found that carbon capture and storage in the North sea can reduce emissions from gas and coal power stations by 80 per cent." —[ Official Report, 22 March 2006; Vol. 666, c. 294.]
	In the 2006 pre-Budget report, he said
	"Today, Norway and Britain are together launching the first feasibility study for a new infrastructure for carbon capture and storage under the North sea."—[ Official Report, 6 December 2006; Vol. 666, c. 309.]
	The Chancellor announced today that there would be a competition, about which the Minister for Trade will tell us at some point today or in the near future.
	Talk is cheap, and there has been an awful lot of it. The President of the United States has made available a $90 million tax allowance for a carbon capture and storage pilot project in the US. After all the warm words we have heard, intended to reinforce our green credentials, the Chancellor had an opportunity today to announce how much would be provided for the Peterhead CCS project and how the funding mechanism would work.
	The Chancellor referred many times to senior citizens. What he failed to do was end the shame of means-testing and introduce a proper living pension. Like the hon. Member for Burnley (Kitty Ussher), I welcome the change in income tax for pensioners—the new threshold will help those who were previously just above the threshold and were missing out—but one in five pensioners in Scotland still lives in poverty. Means-testing has been extended, and nothing was said today to give me any comfort. With real pension inflation at about 9 per cent., the Government have missed an opportunity to provide a living citizen's pension and to index-link it properly.
	I do not recall the Chancellor's saying anything about the Olympics, although I know he has done so on a number of occasions in the past. That may be because he, or a future Chancellor, has written a blank cheque. The cost has already reached £9 billion, and everyone assumes that it will "go north" to £15 billion or £20 billion. This is an open-ended spending commitment, and—as with the war in Iraq and the decision to extend the life of Trident—we will be paying the costs for generations to come.

Rob Marris: My hon. Friend is absolutely right. A little Brown pill is much better than a little blue pill.
	The flavour of what the Leader of the Opposition and the very knowledgeable right hon. Member for Wokingham (Mr. Redwood) seemed to be saying was that nothing has improved in 10 years: that we have spent all this money—yes, we have, and it is a jolly good thing—and it has all been wasted. The right hon. Member for Wokingham repeatedly used that word, and it was implied, if not used in terms, by the Leader of the Opposition. I do not know what it is like in Witney—I have not been there in probably 40 years—or in Wokingham, which I have never had the pleasure of visiting. However, I know what it is like in Wolverhampton, where I was born and have lived almost all my life, and which I have the honour to represent.
	I invite the Leader of the Opposition and the right hon. Member for Wokingham to visit Wolverhampton if they think that nothing has changed, and to consider not just factors such as the dignity of work and people's lives—I referred to them earlier—but the physical things that one can see, which is the simplest measure. There are all kinds of other things going on behind closed doors, if I might put it that way, but let them consider the physical factors. My partner and I have lived in the same house for more than 23 years, and I know the streets in my area like the back of my hand. I know who has had double glazing in the past 10 years. It is not always possible to see round the back of people's houses; even so, I know who has had a conservatory fitted in the past 10 years.  [Interruption.] Opposition Members are having a little giggle, which is fair enough, but those are visible symptoms of increased prosperity. I can tell who has had a new roof, and so could the Leader of the Opposition, the right hon. Member for Wokingham or any other Member who visited the street where I live, which is in one of the most deprived wards in the country. I can see who has had their dormer windows done. Such prosperity is visible, but it is also visible on a public scale. The idea is that all the money has been wasted somehow, but those right hon. Members could come and see the new—well, it is about three years old—heart and lung centre at New Cross hospital, the acute hospital that serves my constituents in Wolverhampton and some of the surrounding areas. It is arguably—according to the professionals, not just to the politicians—the best in Europe. It is a fantastic facility. Consultants from other parts of the world visit. They look at the machinery and say, "We've got one of those: you've got one for every bed." They are goggle-eyed at the centre, which was built under this Government. It was also financed by this Government, and it is not PFI, I am glad to say.
	My hon. Friend the Member for Livingston (Mr. Devine) mentioned his previous career. He and others might wish to visit Penn mental health hospital in my constituency, which has been almost totally rebuilt and deals with out-patients and in-patients. The mental health trust run by the PCT has a three-star rating. Hon. Members could see the new building and the refurbished old building. They could also see the Tettenhall Wood institute community centre, which has had £500,000 of taxpayers' money spent on it, half of which was euro-dosh. The children's centre in my constituency is a brand new building near West park and around 300 m from my office. On a smaller scale, hon. Members could also see the Oakley Buckley community centre, which has been completely refurbished under this Government. The university has had a £70 million investment, including the new glass front on the Mick Harrison building. If my right hon. Friend the Paymaster General, who is in her place on the Front Bench, visited the University of Wolverhampton—I know that she knows it well, but has not visited it for a while—she would be amazed by the development that has taken place.

Rob Marris: I am in a marginal seat—Enoch Powell's old seat, as many hon. Members know—so I guess that I will find out in two years' time whether the electors think that it is value for money. They have thought so thus far. They elected a Labour MP for the first time in 46 years in 1997 and re-elected me in 2001 and 2005. They thought that they had had value for money then and I think that they will still think so in two years' time. The electorate will decide, and so they should in a democracy.
	The new St. Jude's school—costing £4.5 million—was recently opened by the Secretary of State for Education and Skills. Hon. Members should see the buildings and talk to the people who use them. The hon. Member for Cities of London and Westminster (Mr. Field) was a distinguished and well-to-do businessman before he entered Parliament—he might well still be, as I do not know whether he is moonlighting. So many hon. Members on his side of the Chamber do —[ Interruption. ] Perhaps he has a two-day a week cleaning job. I did not have as distinguished a business career, but I was a partner in a law firm with a turnover of some £30 million—not peanuts—so like the hon. Gentleman I know that not every investment, whether in the private sector or the public sector, is successful. That is in the nature of encouraging risk and innovation.
	Can I say, hand on heart, that none of the money has been wasted? Of course I cannot. Do I think that overall and taken in the round—not on a project-by-project basis—in terms of both the bricks and mortar that I have mentioned, and in terms of the changes in people's lives, we have had value for money? Undoubtedly we have. If we segment the provision, of course we are going to find, for example, a computer that should not have been bought because an office that already had two did not need a third. That can be said about the private sector as much as it can about the public sector, but I have absolutely no doubt that, taken in the round, we have achieved value for money.
	The police do not get talked about much when we discuss Treasury matters, but I believe that we have achieved value for money with them, too. Of course, there is a long way to go on crime, and the recent knife crimes are very worrying. Parenthetically, may I say how pleased I was that the Home Office announced a knife amnesty the day after I lobbied Ministers on that issue last year? I do not know whether that was an example of cause and effect.
	It is true that we have huge problems with violent crime, and gun crime is a massive problem in Wolverhampton, but what is the true story of crime, overall? The independent British crime survey shows that taxpayers' money has been used in a way that has achieved value for money. It has been spent on the police themselves, and on the other forms of policing—the neighbourhood wardens, community support officers and so on—that we must now call the police family. It is difficult for the Opposition to attack us about that, as we have achieved value for money in our spending.
	The private company Manpower UK Ltd. has sent me its employment outlook survey. On page 1, in answer to a question about how total employment might change in the three months to the end of June 2007 compared to the previous quarter, the report says:
	"UK employers forecast a steady hiring climate for the second quarter of 2007".
	Responses such as that give me confidence in the future. I am aware that there will be undulations and oscillations in the economy, but capitalism is cyclical. However, the Chancellor and his Treasury team have tried to smooth some of those undulations over the past 10 years. I think that they have done well, in general terms, and the outlook—as far as one can ever tell the future—is relatively rosy.
	I turn now to tax credits for research and development. I represent a west midlands constituency to which manufacturing is very important. The hon. Member for Dundee, East will recognise what I mean. The Government can do only so much, without returning to the discredited days of a nationalised manufacturing industry. A tiny minority of people in my area wanted to return to that after the closure of Coventry's Peugeot plant, and an even smaller minority wanted it after what happened with Rover in Birmingham. Both closures were devastating, but even so they were handled very well.
	If we are not to renationalise, we need to encourage R and D through the use of tax credits. What is the UK's role in the global economy? I believe that we are a niche marketer in certain sectors. For instance, 8.5 per cent. of our economy is devoted to finance matters, and we are also a niche market in Formula 1 racing, which has a manufacturing crossover.
	On a global scale, then, the UK is a niche marketer. Our population amounts to one fortieth of the combined populations of China and India, the two most populous countries in the world. To succeed as a niche marketer, the UK must, as has been noted, put the intellectual property rights regime in order, because it goes hand in hand with R and D: no one will develop new products if the ideas—and the profits—are going to be ripped off by someone else.
	A little remarked-on element of the Budget is that the R and D tax credit for small and medium-size companies is to rise from 150 to 175 per cent. Not only that but, from April 2008, the tax credit for non-SMEs is to rise from 125 to 130 per cent. That is not a huge increase, but it sends the message that the Government are open for business on R and D. Moreover, the Budget contains investment incentives, with the annual investment allowance and the proposed reformation of the capital allowances regime. All of that is very helpful. Even when corporation tax is cut to below the EU 27 per cent. average, as it is in the Budget, we still have to hope that companies stay in the UK and come to this country and invest for jobs and productivity. We can hurl dry economic statistics back and forth across the Chamber, but we are talking about people's lives.
	This is the sixth Budget debate in which I have participated on Budget day. There is usually a barrage of criticism and comments from the Conservatives about productivity and Government debt, coupled with stories of doom and gloom, but after 10 years, they are running out of steam— [ Interruption. ] The hon. Member for Ribble Valley (Mr. Evans) is laughing, so we may hear something later, but so far we have heard hardly anything about productivity and not much about Government debt.
	The right hon. Member for Wokingham referred to productivity, but only in one undefined sense—we had to infer the definition. In fact, he was talking about output per hour worked. That is an important measure, but we must also consider the output of the economy as a whole and the output per annum per person of working age. When we have such a high employment rate and such a high proportion of people of working age in work—the number of people in the UK labour force is at a historically high 29 million—the actual pie is bigger. Taken in the round our economy is more productive, so there is a bigger pie to divide. Of course, output per hour worked is important, although I accept that there are questions about the statistics on how much growth there has been and how much we have faltered, but the total pie to be divided among people resident in the UK continues to expand.
	High productivity is continuing and, as far as I am aware, gross national income per capita in the UK remains in advance of Germany's. I think our gross domestic product per capita is ahead of Germany's, too. Fifteen years ago, if we had told most people in western Europe that the UK would overtake its European competitors in terms of per capita GDP—or gross national income per capita, which is a slightly different measure although both are measures of prosperity—they would have said, "We think you're wrong. We're not expecting a war in western Europe and we cannot see how else that would come about." I admit that I would have said the same: "Chances of us thrashing Germany economically in 15 years' time? Nah, wouldn't put my money on that." Not that I am a betting person.
	Some of the reasons for that growth are what my hon. Friend the Economic Secretary would call exogenous—external factors—but some of them are due to what has been done by the Government and the Treasury team over the past 10 years. That is not to say that things are perfect, but taken in the round we have gone in the right direction in terms of people's lives and the prosperity of our country.

Mark Field: I cannot let the hon. Gentleman's remarks go without some comment, not least because my mother is German and I visited Germany many times in the 1970s, 1980s and 1990s. One of the issues for that country was the sheer cost of reunification. Much more important in the UK, as German politicians and business men would confirm, were the microeconomic changes of the 1980s under the Thatcher Government, which made a fundamental difference for our future competitiveness. I hope the hon. Gentleman will give credit where it is due for the work that has been done not just in the past 10 years but in the past 25.

Rob Marris: This Budget is good for those at the lower end of the income tax scale as it were, because of what has happened with tax credits and so on. I refer the hon. Gentleman to page 208 of the Budget book in terms of what has happened with income tax. Yes, there are people who will lose because of the abolition of the 10p rate, but there are people skewed towards the bottom end of the income scale who will gain, so the measures are redistributive and I support that. I think that most Labour MPs, if not all of them, would support redistribution from the upper end of the income scale towards the lower end of the income scale. I am comfortable with that as a Labour MP.
	I want to move on from some of the macro-economic stuff to pay tribute to the speech of my hon. Friend the Member for Nottingham, South (Alan Simpson) on climate change. He made a couple of remarks on what I might unashamedly call my specialist subject, or aspect, of climate change: adapting to its effects. But apart from those couple of remarks, all his speech—it was very worthy and good and I agreed with quite a lot of it—was about dealing with the causes of climate change and what we can do to cut emissions in this country and encourage people to generate their own electricity, and all those kinds of things. He did not deal with adapting to the effects of climate change.
	We have a crazy situation in this country, whereby, when we talk about climate change in public or parliamentary debates—whether we are talking about it in some kind of ecological context, or in a Treasury context, as we are today—we talk about the aspect that is beyond our control on a world scale: causes. The United Kingdom is responsible for 2 per cent. of world emissions of greenhouse gases. That is twice as high as it should be given that we have 1 per cent. of the population. But in order to slow down and reverse climate change we need international agreement and action. The Government have a great record on trying to achieve that, but they have not really achieved it so far in relation to China, India, or the USA. The public debate is skewed in as much as we discuss that which is beyond our control, but we do not discuss that which is entirely within our control: dealing with the effects of climate change.
	The effects of climate change are already upon us. One can see that by looking at how early the daffodils came out this year, or whatever measure one wants to take. Whether one looks at anecdotal evidence, or the hard science, we already have the effects of climate change. But we do not talk about what measures, including fiscal measures, we can use to adapt to the climate change that we already have and that, according to the preponderance of scientific knowledge, we will have for at least the next 40 years, even if the world gets its act together and stops pumping out nearly as many greenhouse gases as it does now. If we stopped pumping out those gases tomorrow, we would still have to deal with the effects of climate change. They would grow roughly on a bell curve over 20 years and then start to come down—that is if we stopped all the greenhouse gas emissions, or the excess ones, tomorrow, which is not going to happen.

Brooks Newmark: I am somewhat curious, although I sympathise with what the hon. Gentleman is saying. What aspect of the Chancellor's Budget will change the behaviour of consumers, who the hon. Gentleman sees as causing the greenhouse gases, rather than be merely a revenue-collecting mechanism?

Rob Marris: With respect to the hon. Gentleman, he appears to be completely missing the point that I am making. I am talking about not the causes side of the equation, although I have referred to it by saying that we spend too much of the available time talking about it, but the effects side of the equation. I think that when the hon. Gentleman talks about changing behaviour, he is referring to, for example, people flying less. I am saying not that he advocates that, but that that is the sort of behaviour change to which he is referring. However, that is on the causes side of the equation; I am talking about the effects side of the equation.

Brooks Newmark: But we are talking about the Budget, and in addressing the Budget one should examine what the Chancellor is doing to change the behaviour that has led to the effects about which the hon. Gentleman talks. I would thus once again like to ask him what aspect of the Budget will change the way in which people behave, rather than charge already-rich people with 4x4s a few extra pounds that the Chancellor can shove into his coffers.

Kitty Ussher: I am loth to mention football, given Burnley's current position, but I am sure that that will improve.
	National money is being invested in the regeneration of some of what must be termed our outdated stock of terraced housing. All our secondary schools are being rebuilt under the "building schools for the future" programme. The public sector in its various guises, through the regional development agency, the Higher Education Funding Council and the Learning and Skills Council, is putting together an exciting project for a university in Burnley town centre that will specialise in advanced manufacturing, building on our experience and skills base. I am sure that Members will be intrigued to learn that phase 5 of the development of Burnley General hospital, which has involved capital investment, is opening today. I am only sorry that I cannot be there.
	I have talked about the national macro-economic situation and the dramatic way in which it has tunnelled into one of the poorest parts of the country, in terms of both direct transfers and individual opportunities for my constituents. The Budget will be good news for them. The 5,000 or so who are pensioners will benefit from the increase in pension credit and the tax-free allowance, while working people will benefit from the £1 billion being spent to raise the value of working tax credit. Families will benefit hugely from the increase in child benefit.
	I want to say something about the environmental measures in the Budget. My constituency contains more terraced housing, and more people eligible for the warm front scheme, than any other constituency. The hon. Member for Ribble Valley (Mr. Evans)—my neighbour—nods. The Warm Front scheme is providing precisely the type of energy efficiency help, central heating help and similar measures that will reduce fuel poverty. The hon. Gentleman questioned their existence earlier. I can assure him that they do exist, because I see them being implemented throughout my constituency.
	The Warm Front scheme is a win-win. It is good for our carbon footprint, and it also benefits people on low incomes who will end up spending less on fuel as a result of the Government's investment. As a result of that and our measures to reduce pensioner poverty, we need no longer deal with the problems with which my predecessor says he had to deal. Elderly people were coming to his surgery and saying, "I don't know what to do. I don't have enough money so I have to choose between heating and eating." That used to happen—I am sure that it did not happen only in Burnley—but it no longer happens because of the investment that we have put in. In terms of what we have achieved, that, if nothing else, is something to be incredibly proud of.
	There has been huge progress on fuel poverty, as has been mentioned. However, in the last year that progress has plateaued—and perhaps has gone slightly backwards—because of the blip in oil prices that translated into astonishing fuel bill costs for everybody, and which hit the poorest the hardest, of course. I want to highlight how some of the measures that the Chancellor announced today will prevent such problems from arising in the future. When people are on a budget they budget their income, and they might do so for every element of their expenditure. Therefore, the last thing they need is a fuel bill that they were not expecting that blows all of that budgeting out of the water. That is fundamentally unempowering, and when that bill comes from a private sector company very little can be done. Of course, we can help in various ways, but volatility fuel bills affects the poor disproportionately.
	There are various things that we can do immediately to alleviate that, and we have heard about some of them. I am attracted by the solution of smart metering technology, which enables people to realise on an hour-by-hour, day-by-day basis the value of the energy that they are consuming. Therefore, if there are simple things that people can do that will make an impact, such as turning down the thermostat by 1° or washing clothes at 30° rather than 40°, they will be aware before it is too late that they need to start doing them now. I understand from people who know more about this subject than I do that there is a new generation of smart meters that will not only tell people how much in monetary terms they have already spent, without them having to put 50p pieces and pound coins into the machine or having to buy a card at the newsagent which costs more per therm than any other way of paying for heating. The new generation smart meters can also be used to provide the necessary infrastructure to enable people to sell surplus electricity generated at home back into the grid. It is inevitable that everybody will have such kit in a few years' time and I urge my Front-Bench colleagues to work with Ofgem to try to find a way to accelerate the roll-out.
	Let me explain what the Chancellor has, effectively, done today. He has provided a mechanism for the fuel poor to trade their way out of fuel poverty by giving grants for microgeneration and financial instruments that can be used—as I mentioned in my intervention on the hon. Member for Ribble Valley—to invest in the necessary capital equipment that will reduce people's fuel bills and enable them in time to sell surplus generation back into the grid. That will not require there being huge eyesore wind turbines. I do not know whether the right hon. Member for Witney (Mr. Cameron) is selling any surplus generation back into his local grid—or, indeed, whether he needs to do so.  [Interruption.] Just hot air, an hon. Friend says. What I am discussing is theoretically possible. It happens in other parts of the world. I am told that it happens routinely in Germany. However, it need not just apply to wind turbines; it can apply to many other forms of generation, such as solar panels.
	What better solution can we offer to the less well-off than the following? Instead of just saying, "We're using Warm Front to introduce central heating so you don't have to rely on expensive electric heating", or "we're using Warm Front to put in cavity wall insulation", we can say, "We're also, with a Government-assisted scheme, giving you the means to control your own bills—and, what is more, there is the potential for you to make a small income out of it for yourself."
	I urge colleagues to consider this measure. It works on several levels. It reduces the amount of CO2 emissions that we produce as a country. We could catch up with, and possibly overtake, other European countries in being innovative in this way. It is good for the fuel poor, too, as it reduces their budgets. It will also, of course, provide more jobs in the type of 21st-century advanced manufacturing of the future in which constituencies such as mine have the potential to be involved. I am extremely encouraged by what the Chancellor said about mortgages for capital investment in energy efficiency and working with Ofgem to offer that. I am encouraged that he specifically mentioned the possibility of selling back into the grid. In a few years' time, such ideas will be regarded as obvious.
	The past 10 years have confounded standard economic thought. As I said at the outset, if we put more than one economist into a room—perhaps just one would do—we get several different views. However, one point on which future economic historians will be united is that we have seen something spectacular in the past 10 years.

Mark Field: It is always a great pleasure to speak in a Budget debate, representing as I do the City of London, as well as the city of Westminster. In many ways, this Budget has not involved that much economics. Bearing in mind the contribution of the hon. Member for Burnley (Kitty Ussher), I am always a tad sceptical when people suggest that the economic cycle has ended or that this Government's economic record in the past 10 years is beyond any norm. I am afraid that it is always the way that, on thinking that one has reached a new paradigm, reality comes back to bite before too long. The hon. Lady raised a number of issues that I, too, wish to discuss, but I am less convinced than she is that there has been a turnaround in all economic fortunes and that it is entirely down to the current Chancellor.
	To a large extent, this Budget will be remembered as a great political Budget. For those who were here, the first 48 minutes or so perhaps did not seem terribly exciting. Then, the Chancellor pulled the rabbit out of the hat in the last 30 seconds with a cut in the level of income tax, but it has to be said that it will not come into play until some 13 months' time—from 5 April 2008. This Budget reminded me of one that seemed to go down very well with the press—as I suspect this one initially will, on the television tonight and in the headlines tomorrow—that of March 1992, which was presented by the now ennobled Norman Lamont. As Chancellor, he introduced the lower, 10 per cent. tax rate, which has now been abolished. I suspect that it will reappear before too long, when a future Chancellor wants to pull such a rabbit out of the hat. There are similarities between the two Budgets, and as I say, I suspect that this one will also go down quite well. People will then begin to unravel its fiscal and economic sense in the weeks and months ahead.
	Today's Budget is also politically quite clever. Its income tax and corporation tax cuts could drive a wedge between members of my party, and bring the tax cuts debate nearer to the surface in a party that considers itself—rightly—as a potential Government in waiting.
	Like one or two other contributors to today's debate, I feel it appropriate to take a broad overview of the past decade. It might well be the Prime Minister's last Budget, but—who knows?—it might not necessarily be the Chancellor's last. We assume that he is going to make the move from No. 11 Downing street to No. 10. He may yet produce further Budgets—perhaps not—but presumably, this 11th Budget will indeed be his last. It is only fair to give credit where credit is due: there has been a tremendous record of economic stability. As someone who used to be in business, I wanted stability, and most incumbents in business do. However, one problem with a somewhat flat level of stability—I am not suggesting that we have that now—is that it is often a big disincentive to innovation. So we should not look upon stability itself as being a tremendous goal, but it must be recognised that we have had great stability in the past decade, and most people in business would give the Government credit for that.
	It has been remarked that one of the most important early developments was giving independence to the Bank of England. However, it is less well remembered that in transferring responsibility for interest rates to the Bank, the Government took away its regulatory role. As a result, the Treasury's role within the City and economic affairs has been enhanced, compared with that of the Bank.
	There is no doubt that growth has been maintained and that is partly as a result of global expansion. The economic power of India and China, which are the great super-powers of all of our lifetimes—I suspect that we will see accelerated evidence of that in the decade to come, let alone in the generation to come—has had a great deflationary effect and will continue to do so. There is an enormous amount of spare capacity in both India and China, assuming that neither has any political upheavals.
	I recognise that there has been some skilful management of the economy, both here and in the US. One looks at Alan Greenspan's actions, especially in relation to the downturn in the fourth quarter of 1998 in south-east Asia, but also in the aftermath of 9/11. We also had a terrorist attack, on a much smaller scale, less than two years ago, which might have had a negative effect on the City and tourism in London, and we have to give credit where it is due to the Chancellor and the Treasury for the skilful management after that event.
	That management stands in contrast to what has happened with many of our European neighbours, but as I said in an earlier intervention, it smacks of a paucity of aspiration for us to talk endlessly about our record in relation to Germany, France or Italy over the past 10 or 12 years. In many ways, those countries have not succeeded to any great extent and we should aspire higher.

Mark Field: I am aware of the great problems that exist. My hon. Friend rightly used the word "largesse". I worry that there is a sense of great public sector largesse. That may prove electorally beneficial to the Labour party and a Labour Government going forward, but there will obviously be great concerns about our global competitiveness.
	During the course of the last few hours, the debate has touched on India and China. I again give credit to the Chancellor: he was probably the first leading-rank politician to identify those two countries as important trading countries going forward and to recognise the benefits of the deflationary pressure that their influence has on the world economy. He is also right to regard that as being a great opportunity for this country—a challenge, of course, but not necessarily a threat. As the hon. Member for Luton, North pointed out earlier, the Chancellor has also been right to stay very much at arm's length from further integration into the European Union and the single currency.
	To conclude, looking at the Chancellor's track record over the past decade, as it has affected the UK economy, we see a picture of unparalleled economic calm. Yes, the Chancellor is entitled to some significant credit in relation to Britain's performance. In the years and decades ahead, these times will be regarded by all of us here as being the very best of times, but I fear that we may we also look back upon this era as one when we failed to lay the foundations to ensure that, in the decades ahead, we could see the next generation prosper in a similar vein.

Lynne Jones: The Government say that they believe in choice, so council tenants who wish to remain council tenants should not be penalised for their decision.
	The recent Eddington report concluded that there was a strong economic case for investment in transport. Rod Eddington said that transport projects can offer benefits that are worth four times the cost of investment. He discussed the huge cost to businesses if we fail to check the growing problem of congestion, which, he said, will cost £10 billion a year by 2025, and an additional £12 billion in wasted time for households. In the west midlands, it is reckoned that our economy suffers a loss of £2.3 billion a year as a result of congestion.Since I became a Member of Parliament in 1992 and have regularly attended meetings of the chamber of commerce and other business organisations, there has not been one meeting at which the need for greater investment in transport has not been mentioned. I hope that some of the additional capital spending will go into transport.
	Recently the Environment Committee visited Baden-Württemberg in Germany. One of the cities that we visited was Freiburg. When we asked people there whether they were thinking of a congestion charge, they looked at us completely nonplussed. They said, "Why should we need a congestion charge? A third of our journeys are by bicycle and everybody else uses public transport. People only use their private cars for recreational journeys, because our public transport is so excellent." In Baden-Württemberg €1.25 billion a year goes into transport investment, and one can see the impact of that in a city like Freiburg.
	Sadly, we have not put in that investment, and the only option is to move to road pricing. The sooner we do that, the better for the health of our economy. I have often congratulated the Mayor of London on the brave move to introduce the congestion charge, which shows that when politicians are brave and do the right things, they get the reward. We are now in the position where we will have to invest in the implementation of a road pricing scheme. Had we been putting the money in over the past 10 years, perhaps that would not have been necessary.
	On environmental issues, I agree with the points made by my hon. Friend the Member for Nottingham, South (Alan Simpson). The Chancellor announced today an additional £6 million for the low carbon buildings programme and tax relief on renewable obligations certificates. These are minuscule measures. At present, in the low carbon buildings programme there is a monthly allocation and it runs out within 75 minutes. The Chancellor has put in an additional third, so perhaps the money will not run out for 100 minutes.
	About tax relief on renewables obligation certificates, I am rather sceptical. It has all the hallmarks of a gimmick. The system of ROCs was set up for larger generators of renewable energy. It is an extremely bureaucratic process to obtain the certificates and the transaction costs will heavily outweigh the benefits for small developments. My hon. Friend the Member for Nottingham, South was right to commend the German system—and it is not just the German system; most other European countries operate the feed-in tariff.
	The proof of the pudding is in the eating. With our system of renewables obligation certificates, renewable generation has increased from 2 per cent. in 1990 to 4.22 per cent. in 2005. In Germany the increase has been from a slightly higher base, 3.2 per cent., to 10.2 per cent. The costs of the measures are similar. It costs the consumer in Germany about £12 a year, compared with £7 in our system, but obviously the German system is much more successful. I hope the Government will move away from the renewables obligation method to the feed-in tariff. That will be a sign that they are taking their obligation to tackle climate change seriously.
	If we had good feed-in tariffs, the grants would not be nearly as relevant. There would be every incentive for local communities to set up community renewable energy schemes. We saw that in Germany, in a village with its own combined heat and power system, which was set up by two farmers who wanted another means of selling their arable crops. They were able to get investment on the back of the amount of money that they obtained from selling the electricity they generated as a by-product of the heat that heated the village.
	Similarly, they had a photovoltaic system on the roof of the building where they stored their tractors, and I reckoned that that was bringing them in about €30,000 a year as a result of the feed-in tariff. That tariff also encourages innovation, because although the payment received from a particular investment is consistent over 20 years, a new investment the following year gets a lower payment. The big plus of that system over ours is that it is reliable. People know that they are going to get that income over the 20-year life of a project.
	I disagree with my hon. Friend the Member for Nottingham, South about the emissions trading scheme. I would like to suggest a trading scheme for aviation. The proposal made by the Leader of the Opposition on aviation taxes has been rightly pilloried. An idea that has been suggested to me is that every individual should be given a personal air miles allocation equivalent to, say, a return trip to Spain, which they would be able to cash in for a holiday. People who do not travel abroad because they are too poor or think that it is better to holiday in this country would be able to trade their unused permits for income. That would benefit poorer people. If we had such a system, we could tax aviation more highly.
	Finally, I should like to mention mental health. I am very pleased that on page 97 of the Red Book there is mention of the review of mental health and employment outcomes. It talks about an holistic approach to helping people with mental health problems who are in employment, on incapacity benefit, or out of employment and trying to get back into work. I look forward to the additional spending in the comprehensive spending review on talking therapies, counselling and other tried and tested support for people with mental health problems.
	Overall, there are many welcome and positive features in the Budget, particularly on capital expenditure. However, in some measures, particularly on climate change, we are seeing no more than token gestures. If we are to meet our climate change targets, the Government will have to be much more radical in future.

Sammy Wilson: I have only about three minutes and I am not taking any more interventions.
	The Chancellor is going to announce tomorrow what will happen to education expenditure in Northern Ireland. Of course, there is also the whole question of the economic package that will be required if the new devolved Administration is going to be sustainable.
	Let me come to some of the matters that cause me concern. The philosophy of our party is that a low-tax economy is a better economy—one that will have more sustainable growth—than a high-tax economy. It is quite clear, despite the euphoria with which the Chancellor's announcement was greeted on the Labour Benches, that as far as taxation is concerned, this Budget increases the burden. It increases the burden of personal taxation, as can be seen on page 208 of the Red Book. If we add in the taking away of the 10p income tax band and the changes to national insurance contributions, it is clear that taxpayers will be worse off.
	I suppose it was a classic piece of Stalinist propaganda at the end of the Chancellor's speech—and it was cheered to the hilt by Labour Members. I know that the Chancellor has been compared to Stalin, but perhaps it would be better to compare him to Fagin—some kind of fiscal pickpocket who has people cheering him when he picks their pockets. That is exactly what is happening here. Indeed, according to the Red Book, the overall tax burden will go up by 8 per cent., while growth is predicted to be at 2.5 per cent. So the real burden of taxation will increase, even though the Chancellor claims that this is a Budget that rewards taxpayers and lightens the burden. All that, of course, impacts on personal initiative, which will in turn impact on economic growth.
	My second area of concern is the increase in corporation tax for small businesses. The Secretary of State has quite rightly said that Northern Ireland must become less reliant on the public sector and more reliant on the private sector. I agree with that, but if we are to move towards a more private sector-based economy, the initial growth will be in small businesses. Yet here we have a Chancellor who is penalising small businesses. Again, if we look at the figures we find that when the impact of the increase in corporation tax for small businesses comes through, £820 million will have been taken from such businesses. That hardly provides a basis for moving from greater reliance on the public sector to greater reliance on the private sector.
	The construction and haulage industries in Northern Ireland will be affected by the 20 per cent. increase in the aggregates tax. Northern Ireland has a specific problem in that regard, in that we have a border with the Irish Republic, where similar taxation is not imposed.
	Debate adjourned.— [Steve McCabe.]
	 Debate to be resumed tomorrow.

Hugh Bayley: York Minster is a special place. It is a huge building, but intimate at the same time. It has played a central role in the history of Christianity in our country for 1,400 years, and yet it also draws people together—Christians and those of other denominations—as we saw just three weeks ago in the service at York Minster to commemorate the bicentenary of the vote in this House to abolish the slave trade.
	The place is of enormous national and international significance. In the undercroft, one finds oneself among the remains of the Roman legionary fort, where, in 306 AD, Constantine was declared emperor. Constantine went on to reunify the Roman empire and grant religious freedom to Christians, which moulded Europe's religion and culture, including the concepts of freedom of expression and toleration, which are such important parts of our way of life today.
	The minster itself was founded in 627 by Edwin, King of Northumbria, after his conversion to Christianity. About 1,300 years ago, the minster library was founded. It is still there and contains the York gospels, an illuminated manuscript made closer to the time of Christ than to the present day. The minster building that we know today dates from the 12th century. The great east window was made and installed by John Thornton between 1405 and 1408, almost 600 years ago. It is the largest medieval work of art in the world—the size of a tennis court. From the ground, it looks almost like an abstract work of art, but up close, a wealth of detail is visible—some of the most delicate, sensitive and descriptive stained glass that has ever been made. The window is to stained glass what the Sistine chapel is to fresco. It is one of the greatest art works in the world.
	Two years ago, York Minister established a development office under the direction of Dr. Richard Shepherd, to raise funds for the restoration and conservation of the east front and the great east window. The whole project will cost about £30 million. It includes not only restoration work, but work to improve access and public understanding of the minster and the window. The restoration of the window will cost about £19 million. The development campaign has raised an astonishing £5 million in just two years, which reflects the public interest in and concern for the minster, as well as the energy of Richard Shepherd and his staff. Many of the gifts have been made anonymously—people are not seeking self-aggrandisement; the gifts simply reflect the importance that the building has in their hearts.
	The Heritage Lottery Fund has given great support to the development campaign. In January last year it provided a £50,000 project planning grant, and in September it provided a further grant of £390,000 to minimise the risk to the window—what it described as an immediate risk of deterioration. The grant will enable the 311 glass panels to be removed from the window and stored in the Bedern chapel, where visitors will be able to see the panes being conserved and the iconography—the pictures in the windows—explained. In December 2006, York Minster submitted its grant request for £10 million for its "York Minster Revealed" project to the Heritage Lottery Fund. Richard Shepherd has told me how beneficial the application process has been. Because the application is so large, it has undergone several iterations. It has been strengthened enormously as a result of the input and advice of staff of the fund. "York Minster Revealed" is more than just a restoration and conservation project, although that is at its heart. It will also pass on craft skills in carving stone and conserving stained glass to another generation. At present there are two stonemason apprentices in the York Minster stoneyard, and the aim is to add a further five. There is one apprentice in the York Glaziers' Trust, and the trust wants another three.
	The application to the lottery fund will improve physical access to the minster by facilitating public access through the main entrance in the south transept. There will be a better ramp to provide access for disabled people, and for the first time they will have access to the undercroft by means of a lift. There will also be what is described as "improved intellectual access". That is culturespeak—a language that I do not understand myself—for interpretation of what is in the minster for the benefit of the public. It does not mean that special walkways will be established for university professors; it means that people like my hon. Friend the Minister and I will be able better to understand the history and purpose of the minster, including the meaning of the great east window and its use for teaching in mediaeval times. All that will be done through the latest technology and through publications, short courses and lectures. I know that my hon. Friend the Minister has a strong personal interest in and knowledge of cathedrals in general. He was a chorister at Peterborough cathedral. I also know that he has a great interest in York Minster and the "York Minster Revealed" campaign in particular. He visited the minster in November last year, and is consequently well briefed on the state of the east front.
	Two thirds of the stone in the window needs to be replaced. Some of the stone, particularly high up on the minster towers, is so loose that it could fall. That state of disrepair become apparent only when the scaffolding was erected. I thank the Heritage Lottery Fund for its "In the Beginning" funding, which allowed the scaffolding to be erected so that the window could be removed. Repairing the stonework will require 2,500 new blocks of stone to be carved, each a sculpture in its own right. The average cost of carving each block will be £600, and members of the public can sponsor a block by paying that sum. If people reading the report of the debate wish to do so, they should contact the minster to be told how they can make a contribution to this enormously important work.
	The restoration is needed in heritage terms. I do not want the east front of York Minster to fall during my watch as Member of Parliament for the City of York, and I am sure that the Minister does not want to be seen to fail to protect a building of such importance on his watch. York Minster has cultural and economic importance, in addition to its supreme importance to our national heritage. It is the most important icon representing Yorkshire's identity, and it is a symbol of the quality of life in the city that I represent in Parliament. That quality of life has helped the city to attract new investment and new jobs in science, financial services and information technology—and, indeed, in heritage and conservation—which have replaced the manufacturing jobs that the city has lost over the past two decades. The minster is one of the most visited tourist attractions in the country. It has long been important to tourism, which brings millions of pounds to the city of York and to the region of Yorkshire. It has played that function for centuries.
	I will not ask the Minister to approve the Heritage Lottery Fund grant, as I know that the fund is independent of his Department, but I appeal over his head to the trustees. I welcome the decision of the chair of the trustees, Liz Forgan, to visit York Minster in May, and I hope that she and her colleagues on the board will approve the large grant in July. I do, however, ask the Minister to ensure that the Government signal their own interest in, and support for, the restoration by discussing the project with Yorkshire Forward and by asking what contribution they can make to the restoration, and I ask the Minister to write to me after he has had such conversations.
	I particularly welcome the announcement made in the Budget speech today that the Chancellor has launched a review of church funding, to be undertaken jointly by the Treasury and the Department for Culture, Media and Sport, and I hope that the Chancellor will meet representatives of the cathedrals to discuss what additional support the state might be able to give them. I also welcome the partnership between English Heritage and the Wolfson Foundation, which will provide grants up to the value of £250,000 to cathedrals. I understand that it is possible for cathedrals to apply for those grants from September of this year. I know that the York Minster appeal will make such an application, and I hope that the Government will support it. If the Government acknowledge the importance of the restoration with their own statements and financial support, that will encourage the HLF to give the project the support that it needs, and encourage members of the public to make private donations.
	The decision to be taken by the lottery fund in July is extremely important. We all know that the resources available to the HLF will fall between now and the Olympics, and I am afraid that if a grant is not approved this year the work on the window could be delayed for quite some time. It would be a disaster—a tragedy—if the window were missing or boarded up and millions of visitors over years to come were denied access to one of the art treasures of the world. When John Thornton completed the window in 1408 he was paid £58 for his labours, including a £10 bonus for completing it on time—within three years. I asked the statisticians in the House of Commons Library to calculate what £58 was worth in today's prices and I was astonished to learn that the answer was just the sum of £38,000. We all wish that the restoration could be completed for £38,000. However, restoration is harder and more costly than creating a new work of art, and the cost of labour and materials are much higher now than they were 600 years ago. It would, however, be a real shame and a failure of our stewardship of our country's heritage if a window that took three years to make 600 years ago were to take a decade, or even longer, to restore.
	I hope that my hon. Friend the Minister will do whatever he can to make sure that we do not face such delay. Indeed, as next year will be the 600th anniversary of the completion of the window, I hope that we will know by then that there will be sufficient funds to keep it in good repair for the next 600 years.

David Lammy: I begin by congratulating my hon. Friend the Member for City of York (Hugh Bayley) on securing this important debate, and by thanking him for his valuable insights into this most iconic of buildings. As he pointed out, the contribution that York Minster makes to our nation and to all in our society—be they Christians, those of other faiths or of no faith—is nothing short of immense. It is of course primarily fulfilling the spiritual needs of many people, and it is extremely active in meeting the needs of its local community.
	In heritage terms, York Minster's significance is immeasurable. It is a most intricate and exquisite building, and its archives and artefacts are of international importance. Its contribution to the arts is also huge, and it has a never-ending programme of events and exhibitions. It is a major provider of educational services, hosting innumerable school visits in its excellent education centre, and holding lectures and events for learners of all ages. It also provides training and apprenticeship in a range of traditional building skills, including stonemasonry and glazing. It is upholding the fine choral tradition of our country—a subject very close to my heart. That is perhaps why it is the most visited cathedral in our country.
	The minster employs many people, thereby making its own direct contribution to the local economy, and it is a centre of much volunteer activity. A dedicated band of 500 people help to enhance the visitor experience and to keep everything going. As I said, it is a hugely important tourist magnet that attracts many people from all over the world not just to the minster itself, but to the surrounding areas, thereby benefiting the neighbouring businesses—the cafes, restaurants, pubs, hotels and guest houses—and providing a huge boost to that important local economy.
	The Government know that such a huge, intricate and historic building is always going to need a lot of care and attention to ensure that it remains in the best possible condition, so that it can be enjoyed by those who come after us. I am of course aware of the conservation projects being undertaken, and they do not come any larger than the restoration of the east front, which is an enormous undertaking. I understand that well in excess of 100 panes of glass in the great east window need to be repaired, and that some 2,500 stones need to be replaced due to the ravages of time. The whole project will keep many people busy for 10 years or more, and they include some of our most skilled craftspeople, whose talents will be tested to the full.
	As my hon. Friend said, I had the great privilege last November of visiting the minster to look at the restoration work. I visited the masons' yard and the glaziers' workshop, and I met some of the people striving to take this huge project forward. It was a great privilege to talk to the conservationists, particularly the glaziers, about that intricate work and to see some of it in progress. I was impressed with the skill and dedication with which these people were working, and I enjoyed learning about their work and their individual contributions to the wider project.
	I am also very pleased that the restoration is itself being used as a way of engaging the public in the history of the minster and its methods of conservation. What better way to get a Minister's attention than to invite him to spend time on the roof of the York Minster? I wore a hard hat and I was petrified at the prospect of ending up on the ground, but I was delighted by the vista before me. I had a wonderful time and I thank Richard Shepherd and his team very much for making that so.
	I recognise, of course, that there are enormous costs associated with the ongoing project, and I wish to congratulate all of those engaged in fundraising activity, and all those individuals and businesses who have contributed to this vital work. The Government make significant investments in the preservation of our ecclesiastical gems. Taken together, the Government and lottery support in that area has averaged around £60 million per year. Of course, it is necessary to target those resources on those buildings most in need of repair and least able to afford the work or raise the funds to pay for them.
	My hon. Friend referred to the level of grant funding available through the English Heritage grants for cathedrals scheme. The scheme has been a success, pumping more than £43 million during its lifetime into cathedrals, and doing exactly what it was set up to do—to tackle the backlog of high level repairs that existed before the scheme started. As my hon. Friend said, English Heritage is now in an exciting partnership with the Wolfson Foundation, which is matching its contribution for three years, for which we and the cathedrals, are grateful. I would encourage York Minster to make an application under the scheme and I wish it every success in doing so.
	While the amounts of money dedicated to the scheme are a matter for the English Heritage commissioners, we in the Government support the refocusing of resources into our churches and places of worship of all faiths and denominations that are less able to raise the necessary funding themselves. York has benefited under the English Heritage cathedrals programme and it has received much more than £1 million for various previous projects.
	English Heritage has also been extremely active in other ways in supporting and advising on the project. York has also had funding from our excellent listed places of worship scheme, which returns VAT on repairs. Historic buildings with a measure of commercial use are able to reclaim elements of the VAT incurred on repairs via their VAT returns. That is certainly the case for the minster, and any portion not reclaimable in that way can still be recouped from the LPW scheme. While I mention the LPW scheme, I remind the House that grants totalling more than £55 million have been made since 2001, and more than £1 million per month is being given out at present.
	York Minster also has an excellent record of successful applications to the Heritage Lottery Fund, in respect of a variety of projects, including the extension of the library, the re-organisation of the exhibition space, support for craft skill training, a project planning grant for the planning stage of the current project, and a large contribution to the York Glaziers Trust so that work on the east window could start.
	Turning to the issue of the future of funding, I am of course aware of the views of the heritage sector on the need for further funding for the conservation and care of those buildings whose importance to our heritage could not be more obvious. I acknowledge the requests for further funding as set out in the "Inspired!" campaign, in the paper "Building Faith in our Future" and in the Church of England's "Next Steps" document. I have already outlined some of the funding that is already in place.
	My hon. Friend the Member for City of York will know that I cannot comment on future funding during the course of a spending review. The sector's case has been well put and will be considered during the course of the work that is continuing on the spending settlement, but I must repeat that it will be a tough spending round and that I can make no attempt to second guess the final outcome. However, my hon. Friend will have heard what the Chancellor said from this Dispatch Box this afternoon about church heritage. My right hon. Friend set out the work that he is doing in that regard with my right hon. Friend the Secretary of State for Culture, Media and Sport. We must all be pleased that that attention is being given to funding our heritage, and especially our church buildings.
	The Heritage Lottery Fund should receive more than £700 million of new lottery money between 2008 and 2012, notwithstanding last week's announcement of the use of the fund for the Olympics. My hon. Friend the Member for City of York will know that it is for the HLF to make decisions about applications, and he will understand that I cannot comment. However, I wish the application every success, and the relationship between the HLF and York Minster means that it must be a worthy candidate.
	The Government are also keen to support other areas of the life of our cathedrals, and that is why money is made available, where it is needed, through the choir schools scholarship scheme, which is funded by the Department for Education and Skills. Also, in respect of training for craft skills, the Government are keen to do what they can to ensure that there are sufficient people trained in all of the skills necessary to keep our historic buildings in good order.
	I am pleased to note that York Minster is involved in the Yorkshire and Humber heritage skills academy, which is supported by Government money through the Department for Trade and Industry and the construction skills training board. York is also part of the cathedral workshop fellowship, which is joining up cathedrals across the country to provide a broader training experience for apprenticeships. Moreover, a large HLF grant is being used by English Heritage, the National Trust, Cadw and others to provide a range of bursaries for training in traditional craft skills. It is exactly these kinds of partnerships across the sector that will ensure that the skills will be there when needed, and that the resources that are available are used to maximum effect. I shall be happy to speak to the local regional development agency, Yorkshire Forward, to ensure that York Minster receives the attention that it deserves. I shall report back to my hon. Friend the Member for City of York about that.
	The House will be aware that two weeks ago my right hon. Friend the Secretary of State launched "Heritage Protection for the 21st Century", the long promised White Paper on the future of heritage protection. Last week, I attended the heritage forum, at which all the major heritage bodies for England are represented. I am pleased to say that the White Paper was met with support and enthusiasm across the board. Among many other provisions, a key feature of the White Paper is a proposal that will reduce the administrative burdens associated with work to historic churches and cathedrals. In dialogue with the exempt denominations, we propose an increase in the scope of the ecclesiastical exemption so that a wider range of assets can be free from the need for parallel permissions before vital works of repair can commence. A wide range of Government-sponsored activity is in place, designed specifically to make life easier for cathedrals and churches, not only in the area of conservation, but in wider ways that connect the preservation of the fabric into the life of the building.
	York Minster is an ongoing success story: success in attracting people through the doors and into the area, success in its huge range of complementary activities and community outreach, and success in accessing support of all kinds for the massive job that is the restoration of the building. There is support from the Government and the lottery and from the local people, communities and economy that gain so much from having the minster at their heart. I have no doubt that the restoration of the east front will be part of that continuing success story.
	 Question put and agreed to.
	 Adjourned accordingly at twenty-five minutes to Eight o'clock.